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CREDIT AGREEMENT
Dated as of November 19, 1997
among
U.S. TIMBERLANDS KLAMATH FALLS, L.L.C.,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent,
and
Letter of Credit Issuing Bank
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
Arranged by
BANCAMERICA XXXXXXXXX XXXXXXXX
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS....................................................... 6
1.1 Certain Defined Terms................................................ 6
1.2 Other Interpretive Provisions........................................ 28
1.3 Accounting Principles................................................ 29
ARTICLE II THE CREDITS...................................................... 29
2.1 Amounts and Terms of Commitments..................................... 29
(a) The Acquisition Credit........................................ 29
(b) The Working Capital Credit.................................... 29
2.2 Evidence of Obligations.............................................. 30
2.3 Procedure for Borrowing.............................................. 30
2.4 Conversion and Continuation Elections................................ 31
2.5 Optional Prepayments................................................. 33
2.6 Mandatory Prepayments of Loans; Mandatory Commitment Reductions...... 33
(a) Mandatory Prepayments......................................... 33
(b) Mandatory Commitment Reductions............................... 34
2.7 Repayment............................................................ 35
(a) The W/C Revolving Credit...................................... 35
(b) The Acquisition Revolving Credit.............................. 36
(c) The Swingline Credit.......................................... 36
(d) Letters of Credit............................................. 36
2.8 Interest............................................................. 36
2.9 Swingline Loans...................................................... 37
2.10 Fees................................................................. 39
(a) Arrangement, Agency Fees...................................... 39
(b) Commitment Fees............................................... 39
2.11 Computation of Fees and Interest..................................... 40
2.12 Payments by the Company.............................................. 40
2.13 Payments by the Banks to the Agent................................... 41
2.14 Sharing of Payments, Etc............................................. 41
2.15 Voluntary Termination of Commitments................................. 42
ARTICLE III THE LETTERS OF CREDIT........................................... 42
3.1 The Letter of Credit Facility........................................ 42
3.2 Issuance, Amendment and Renewal of Letters of Credit................. 44
3.3 Risk Participations, Drawings and Reimbursements..................... 46
3.4 Repayment of Participations.......................................... 48
3.5 Role of the Issuing Bank............................................. 48
3.6 Obligations Absolute................................................. 49
3.7 Cash Collateral Pledge............................................... 50
3.8 Letter of Credit Fees................................................ 50
3.9 Uniform Customs and Practice......................................... 51
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ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY........................... 51
4.1 Taxes................................................................ 51
4.2 Illegality........................................................... 52
4.3 Increased Costs and Reduction of Return.............................. 53
4.4 Funding Losses....................................................... 54
4.5 Inability to Determine Rates......................................... 54
4.6 Reserves on Offshore Rate Loans...................................... 55
4.7 Certificates of Banks; Limitation on Demand.......................... 55
4.8 Substitution of Banks................................................ 55
4.9 Survival............................................................. 56
ARTICLE V CONDITIONS PRECEDENT.............................................. 56
5.1 Conditions of Initial Loan........................................... 56
(a) Credit Agreement.............................................. 56
(b) Authorization Documents....................................... 56
(c) Legal Opinions................................................ 57
(d) Payment of Fees............................................... 57
(e) Certificates.................................................. 57
(f) Equity Offering............................................... 57
(g) Debt Offering................................................. 58
(h) Repayment of Existing Debt.................................... 58
(i) Compliance Certificate........................................ 58
(j) Quarterly Timber Report....................................... 58
(k) Other Documents............................................... 58
5.2 Conditions to Acquisition Revolving Loans............................ 58
5.3 Conditions to All Borrowings and Issuances of Letters of Credit...... 59
(a) Notice of Borrowing, Conversion/Continuation
or Letter of Credit Application............................... 59
(b) Continuation of Representations and Warranties................ 59
(c) No Existing Default........................................... 59
ARTICLE VI REPRESENTATIONS AND WARRANTIES................................... 59
6.1 Existence and Power.................................................. 59
6.2 Corporate Authorization; No Contravention............................ 60
6.3 Governmental Authorization........................................... 60
6.4 Binding Effect....................................................... 60
6.5 Litigation........................................................... 60
6.6 No Default........................................................... 61
6.7 ERISA Compliance..................................................... 61
6.8 Use of Proceeds; Margin Regulations.................................. 62
6.9 Title to Properties.................................................. 62
6.10 Taxes................................................................ 62
6.11 Financial Condition.................................................. 62
6.12 Environmental Matters................................................ 63
6.13 Regulated Entities................................................... 63
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6.16 Subsidiaries......................................................... 64
6.17 Insurance............................................................ 64
6.18 Swap Obligations..................................................... 65
6.19 Full Disclosure...................................................... 65
ARTICLE VII AFFIRMATIVE COVENANTS........................................... 65
7.1 Financial Statements................................................. 65
7.2 Certificates; Other Information...................................... 66
7.3 Notices.............................................................. 68
7.4 Preservation of Existence, Etc....................................... 69
7.5 Maintenance of Property.............................................. 69
7.6 Insurance............................................................ 70
7.7 Payment of Obligations............................................... 70
7.8 Compliance with Laws................................................. 70
7.9 Compliance with ERISA................................................ 70
7.10 Inspection of Property and Books and Records......................... 70
7.11 Environmental Laws................................................... 71
7.12 Use of Proceeds...................................................... 71
ARTICLE VIII NEGATIVE COVENANTS............................................. 71
8.1 Limitation on Liens.................................................. 71
8.2 Disposition of Assets................................................ 73
8.3 Consolidations and Mergers........................................... 75
8.4 Loans and Investments................................................ 75
8.5 Limitation on Indebtedness........................................... 76
8.6 Transactions with Affiliates......................................... 77
8.7 Use of Proceeds...................................................... 77
8.8 Contingent Obligations............................................... 77
8.9 Joint Ventures....................................................... 78
8.10 Lease Obligations.................................................... 78
8.11 Restricted Payments.................................................. 79
8.12 ERISA................................................................ 79
8.13 Change in Business................................................... 79
8.14 Minimum Pro Forma EBITDDA to Pro Forma Interest Expense.............. 79
8.15 Maximum Funded Debt to Pro Forma EBITDDA............................. 80
8.16 Minimum Asset Value to Funded Debt Ratio............................. 80
8.17 Accounting Changes................................................... 80
8.18 Amendments to Documents.............................................. 80
8.19 Limitation on Voluntary Payments on Senior Notes..................... 80
8.20 Harvesting Restrictions.............................................. 80
ARTICLE IX EVENTS OF DEFAULT................................................ 81
9.1 Event of Default..................................................... 81
(a) Non-Payment................................................... 81
(b) Representation or Warranty.................................... 82
(c) Specific Defaults............................................. 82
(d) Other Defaults................................................ 82
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(e) Cross-Default................................................. 82
(f) Insolvency; Voluntary Proceedings............................. 83
(g) Involuntary Proceedings....................................... 83
(h) ERISA......................................................... 83
(i) Monetary Judgments............................................ 83
(j) Non-Monetary Judgments........................................ 84
9.2 Remedies............................................................. 84
9.3 Rights Not Exclusive................................................. 85
ARTICLE X THE AGENT......................................................... 85
10.1 Appointment and Authorization; "Agent"............................... 85
10.2 Delegation of Duties................................................. 85
10.3 Liability of Agent................................................... 86
10.4 Reliance by Agent.................................................... 86
10.5 Notice of Default.................................................... 87
10.6 Credit Decision...................................................... 87
10.7 Indemnification of Agent............................................. 87
10.8 Agent in Individual Capacity......................................... 88
10.9 Successor Agent...................................................... 88
10.10 Withholding Tax...................................................... 89
ARTICLE XI MISCELLANEOUS.................................................... 90
11.1 Amendments and Waivers............................................... 90
11.2 Notices.............................................................. 91
11.3 No Waiver; Cumulative Remedies....................................... 92
11.4 Costs and Expenses................................................... 92
11.5 Company Indemnification.............................................. 92
11.6 Payments Set Aside................................................... 93
11.7 Successors and Assigns............................................... 93
11.8 Assignments, Participations, etc..................................... 93
11.9 Confidentiality...................................................... 95
11.10 Set-off.............................................................. 96
11.11 Automatic Debits of Fees............................................. 96
11.12 Notification of Addresses, Lending Offices, Etc..................... 96
11.13 Counterparts......................................................... 97
11.14 Severability......................................................... 97
11.15 No Third Parties Benefited........................................... 97
11.16 Governing Law and Jurisdiction....................................... 97
11.17 Waiver of Jury Trial................................................. 98
11.18 Entire Agreement..................................................... 98
SCHEDULES
Schedule 2.1 Commitments
Schedule 5.1(b) States for Good Standing Certification
Schedule 6.7 ERISA
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Schedule 8.1 Permitted Liens
Schedule 8.4(b) Cash Management Program
Schedule 8.4(g) Existing Investments
Schedule 8.5 Permitted Indebtedness
Schedule 8.6 Transactions with Affiliates
Schedule 8.8 Contingent Obligations
Schedule 11.2 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinion of Company's Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F-1 Form of Acquisition Revolving Promissory Note
Exhibit F-2 Form of W/C Revolving Promissory Note
Exhibit G Initial Timber Report
Exhibit H Form of Escrow Agreement
Exhibit I U.S. Timberlands Procedure for Purchase Orders, Check Requests
and Accounts Payable
Exhibit J U.S. Timberlands Investment Policy and Guidelines
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CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of November 19, 1997, among U.S.
Timberlands Klamath Falls, L.L.C., a Delaware limited liability company (the
"Company"), the several financial institutions from time to time party to this
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Agreement (collectively, the "Banks"; individually, a "Bank"), and Bank of
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America National Trust and Savings Association, as letter of credit issuing bank
and as agent for the Banks.
WHEREAS, the Banks have agreed to make available to the Company revolving
credit facilities with a letter of credit subfacility upon the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
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1.1 Certain Defined Terms. The following terms have the following meanings:
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"Acquisition" means any transaction or series of related transactions for
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the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person (other than a natural
person), or of any business or division of a Person, (b) the acquisition of more
than 50% of the capital stock, partnership interests, membership interests or
equity of any Person having voting power for the election of directors or other
similar ability to control such Person, or otherwise causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any other combination
with another Person (other than a Person that is a Subsidiary) provided that the
Company or the Subsidiary is the surviving entity.
"Acquisition Funding Date" means the date on which the funding of an
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Acquisition Revolving Loan occurs.
"Acquisition Revolving Commitment" has the meaning specified in subsection
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2.1(a).
"Acquisition Revolving Loans" has the meaning specified in subsection
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2.1(a).
"Affiliate" means, as to any Person, any other Person which, directly or
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indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, membership interests, by contract,
or otherwise.
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"Agent" means BofA in its capacity as agent for the Banks hereunder, and
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any successor agent arising under Section 10.9.
"Agent-Related Persons" means BofA and any successor agent arising under
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Section 10.9 and any successor letter of credit issuing bank or Swingline Bank
hereunder, together with their respective Affiliates (including, in the case of
BofA, the Arranger), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
"Agent's Payment Office" means the address for payments set forth on
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Schedule 11.2 or such other address as the Agent may from time to time specify.
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"Agreement" means this Credit Agreement.
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"Annual Timber Report" has the meaning specified in subsection 7.2(f).
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"Applicable Margin" means, (a) with respect to any Offshore Rate Loan or
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Base Rate Loan, the per annum amounts set forth below under Applicable Margin
opposite the Pricing Level in effect on the date such Offshore Rate Loan or Base
Rate Loan is borrowed, continued or converted (notwithstanding any subsequent
change in the Pricing Level during the Interest Period applicable to such
Offshore Rate Loan) and (b) with respect to the commitment fee and letter-of-
credit fee, the per annum amounts set forth below under Applicable Margin
opposite the Pricing Level in effect from time to time; provided, however, that
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until delivery of the Compliance Certificate pursuant to subsection 7.2(b) for
the period ending June 30, 1998, the Applicable Margin shall be (i) 50 basis
points in the case of the commitment fee, (ii) 250 basis points in the case of
the Offshore Rate, (iii) 150 basis points in the case of the Base Rate, and (iv)
250 basis points in the case of letter of credit fees:
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Applicable Margin
(in basis points per annum)
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Pricing Commitment Offshore Base Rate Letter of
Level Fee Rate+ Credit Fee
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1. 37.5 100.0 0.0 100.0
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2. 37.5 137.5 37.5 137.5
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3. 50.0 175.0 75.0 175.0
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4. 50.0 225.0 125.0 225.0
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5. 50.0 250.0 150.0 250.0
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"Pricing Level" means, for each Pricing Period the pricing
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level set forth below opposite the Leverage Ratio set forth in the
7
Compliance Certificate most recently delivered to Agent pursuant to
Section 7.1 below:
Pricing Level Leverage Ratio
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1. less than or equal to 2.75 to 1.0
2. greater than 2.75 to 1.0 but less than or equal
to 3.50 to 1.0
3. greater than 3.50 to 1.0 but less than or equal
to 4.0 to 1.0
4. greater than 4.0 to 1.0 but less than or equal
to 4.50 to 1.0
5. greater than 4.50 to 1.0
provided, however, that if any Compliance Certificate
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is not delivered by the date required by subsection 7.2(b), then,
subject to the other provisions of this Agreement, commencing on the
date such Compliance Certificate was required to be delivered until
the date such Compliance Certificate is delivered, the highest
Applicable Margin shall apply; from and after the date three Business
Days after such Compliance Certificate is received, the Applicable
Margin indicated by the Leverage Ratio set forth in such Compliance
Certificate shall apply.
"Pricing Level Change Date" means, beginning June 30,
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1998, the date five Business Days after the date upon which the
Company delivers a Compliance Certificate pursuant to subsection
7.2(b).
"Pricing Period" means each period commencing on each
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Pricing Level Change Date and ending the day prior to the next Pricing
Level Change Date
"Arranger" means BancAmerica Xxxxxxxxx Xxxxxxxx, a Delaware corporation.
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"Asset Value to Funded Debt Ratio" means, at any date of determination, the
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ratio of (a) 70% of the Retail Timberlands Value as of such date to (b) Funded
Debt.
"Assignee" has the meaning specified in subsection 11.8(a).
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"Attorney Costs" means and includes all fees and disbursements of any law
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firm or other external counsel, the allocated cost of internal legal services
and all disbursements of internal counsel.
"Available Cash" means, with respect to any fiscal quarter and without
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duplication: (a) the sum of (i) all cash and cash equivalents of the Company
and its Subsidiaries (collectively as a consolidated entity, the "Company
Group") on hand at the end of such quarter (excluding any amounts on deposit
pursuant to an Escrow Agreement) and (ii) all additional cash and cash
equivalents of the Company Group on
8
hand on the date of determination of Available Cash with respect to such quarter
resulting from borrowings for working capital purposes made subsequent to the
end of such quarter, less (b) the amount of any cash reserves that is necessary
----
or appropriate in the reasonable discretion of the Managing Member to (i)
provide for the proper conduct of the business of the Company Group (including
reserves for future capital expenditures and for anticipated future credit needs
of the Company Group) subsequent to such quarter, (ii) comply with applicable
law or any loan agreement, security agreement, mortgage, debt instrument or
other agreement or obligation to which any member of the Company Group is a
party or by which it is bound or its assets are subject (including the Loan
Documents), or (iii) provide funds for distributions under Sections 6.4 or 6.5
of the Partnership Agreement in respect of any one or more of the next four
quarters; provided that disbursements made by a member of the Company Group or
cash reserves established, increased or reduced after the end of such quarter
but on or before the date of determination of Available Cash with respect to
such quarter shall be deemed to have been made, established, increased or
reduced for purposes of determining Available Cash, within such quarter if the
Managing Member so determines. In addition, without limiting the foregoing,
Available Cash for any fiscal quarter shall reflect reserves equal to (A) 50% of
the interest projected to be paid on the Senior Notes in the next succeeding
fiscal quarter plus (B) beginning with a date three fiscal quarters before a
scheduled principal payment date on the Senior Notes, 25% of the aggregate
principal amount thereof due on any such payment date in the third succeeding
fiscal quarter, 50% of the aggregate principal amount due on any such payment
date in the second succeeding fiscal quarter and 75% of the aggregate principal
amount due on any quarterly payment date in the next succeeding fiscal quarter,
plus (C) 100% of the aggregate amount of all accrued and unpaid interest in
respect the Loans on the date of determination, plus (D) if the Company has
elected to repay the Acquisition Revolving Loans pursuant to the installment
election provided in subsection 2.7(b)(ii), beginning with a date one fiscal
quarter before the first such installment is due hereunder, the amount of the
next scheduled installment of principal on account of the Acquisition Revolving
Loans.
"Bank" has the meaning specified in the introductory clause hereto.
----
References to the "Banks" shall include BofA, including in its capacity as a
Swingline Bank and an Issuing Bank; for purposes of clarification only, to the
extent that BofA may have any rights or obligations in addition to those of the
Banks due to its status as a Swingline Bank or an Issuing Bank, its status as
such will be specifically referenced.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
---------------
U.S.C. (S)101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum above
---------
the latest Federal Funds Rate; and (b) the rate of interest in effect for such
day as publicly announced from time to time by BofA in San Francisco,
California, as its "reference rate." (The "reference rate" is a rate set by BofA
based upon various factors including BofA's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced
rate.) Any change in the reference rate announced by BofA shall take
9
effect at the opening of business on the day specified in the public
announcement of such change.
"Base Rate Loan" means an Acquisition Revolving Loan, W/C Revolving Loan,
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or L/C Advance, that bears interest based on the Base Rate.
"BofA" means Bank of America National Trust and Savings Association, a
----
national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans of the same
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Type made to the Company on the same day by the Banks, or a Swingline Loan made
to the Company on the same day by the Swingline Bank, in each case pursuant to
Article II, and, other than in the case of Base Rate Loans, having the same
Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs under Section
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2.3.
"Business Day" means any day other than a Saturday, Sunday or other day on
------------
which commercial banks in New York City or San Francisco are authorized or
required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried on in the
applicable London offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive of
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any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any Bank or of any corporation controlling a Bank.
"Capital Lease" means, as to any Person, any lease of any property by such
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Person as lessee that is classified and accounted for as a "capital lease" on
the balance sheet of such Person prepared in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Capital Lease, the
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amount of the obligation of the lessee thereunder that, in accordance with GAAP,
would appear on a balance sheet of such Person in respect of such Capital Lease.
"Cash Collateralize" means to pledge and deposit with or deliver to the
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Agent, for the benefit of (i) in the case of L/C Obligations, the Agent, the
Issuing Bank and the Banks, and (ii) in the case of Offshore Rate Loans, the
Agent and the Banks, in each case as collateral for the L/C Obligations or the
Offshore Rate Loans, as applicable, cash or deposit account balances pursuant to
a cash collateral account agreement in form and substance satisfactory to the
Agent and the Majority Banks. Cash collateral shall be maintained in blocked,
interest bearing deposit accounts at BofA.
"Cash Equivalents" means (i) any evidence of Indebtedness with a maturity
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of 365 days or less issued by or directly, fully and unconditionally guaranteed
or insured by the United States of America or any agency or instrumentality
thereof (provided that the full faith and credit of the United States of America
is pledged in support thereof); (ii)
10
deposits, certificates of deposit or acceptances with a maturity of 365 days or
less of any institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$500,000,000; (iii) commercial paper with a maturity of 365 days or less issued
by a corporation (other than an Affiliate of the Company) incorporated or
organized under the laws of the United States or any state thereof or the
District of Columbia and rated at least "A-1" by S&P or "P-1" by Xxxxx'x; (iv)
repurchase agreements and reverse repurchase agreements relating to marketable
direct obligations issued by or directly, fully and unconditionally guaranteed
or insured by the United States of America or any agency or instrumentality
thereof , in each case maturing within 365 days from the date of acquisition;
(v) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and having as at such date the highest rating obtainable from either S&P
or Xxxxx'x, or (vi) money market mutual or similar funds that invest exclusively
in obligations referred to in clauses (i) through (v) of this definition, in
each case having assets in excess of $100,000,000.
"Change of Control" means the occurrence of any of the following: the
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Managing Member ceases to be the managing member of the Company or the MLP
ceases to be a member of the Company or reduces the percentage amount of its
equity interest in the Company below 98.9899%.
"Closing Date" means the date on which all conditions precedent set forth
------------
in Section 5.1 are satisfied (or, in the case of subsection 5.1(d), waived by
the Person entitled to receive such payment).
"Code" means the Internal Revenue Code of 1986, and regulations promulgated
----
thereunder.
"Commitment", as to each Bank, means such Bank's Acquisition Revolving
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Commitment or W/C Credit Commitment, as applicable; in the case of the Swingline
Bank, its Swingline Commitment; and in the case of the Issuing Bank, its L/C
Commitment.
"Compliance Certificate" means a certificate substantially in the form of
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Exhibit C.
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"Contingent Obligation" means, as to any Person, any direct or indirect
---------------------
liability of that Person, whether or not contingent, with or without recourse,
(a) with respect to any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person (i) to purchase, repurchase
or otherwise acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such primary
obligation, or to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary
11
obligation of the ability of the primary obligor to make payment of such primary
obligation, or (iv) otherwise to assure or hold harmless the holder of any such
primary obligation against loss in respect thereof (each, a "Guaranty
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Obligation"); (b) with respect to any Surety Instrument (other than any Letter
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of Credit) issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered, or (d) in respect of any Swap Contract. The amount of any
Contingent Obligation (other than Swap Contracts) shall be deemed equal to the
lesser of (i) the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made and (ii) the stated
determined amount for which such Person is liable, or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof.
The amount of any Swap Contract shall be equal to the Swap Termination Value
thereof.
"Contractual Obligation" means, as to any Person, any provision of any
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security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under Section 2.4,
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the Company (a) converts Loans of one Type to another Type, or (b) continues as
Loans of the same Type, but with a new Interest Period, Loans having Interest
Periods expiring on such date.
"Conveyance Agreements" means the Contribution, Conveyance and Assumption
---------------------
Agreement among the Managing Member, the Company, Old Services, the MLP and
certain other parties, together with the additional conveyance documents and
instruments contemplated or referenced thereunder.
"Debt Offering" means a public offering of the Senior Notes.
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"Default" means any event or circumstance which, with the giving of notice,
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the lapse of time, or both, would (if not cured or otherwise remedied during
such time) constitute an Event of Default.
"Dollars", "dollars" and "$" each mean lawful money of the United States.
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"EBITDDA" means, for any fiscal quarter, the sum of (a) Net Income, plus
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(b) all amounts treated as expenses for depreciation and the amortization of
intangibles of any kind to the extent included in the determination of Net
Income, plus (c) all amounts treated as expenses for the depletion of Timber
----
from the Timberlands, plus (d) Net Interest Expense to the extent included in
----
the determination of Net Income, plus (e) nonrecurring non-cash charges to the
----
extent included in the determination of Net Income, plus (f) Net Proceeds from
----
sales of assets permitted under Section 8.2 not in
12
excess of $15,000,000 for any four consecutive fiscal quarters, all as
calculated for the Company and its Subsidiaries on a consolidated basis.
"Effective Amount" means (a) with respect to any Loans on any date, the
----------------
aggregate outstanding principal amount thereof after giving effect to any
Borrowings and prepayments or repayments of Loans occurring on such date; and
(b) with respect to any outstanding L/C Obligations on any date, the amount of
such L/C Obligations on such date after giving effect to any Issuances of
Letters of Credit occurring on such date and any other changes in the aggregate
amount of the L/C Obligations as of such date, including as a result of any
reimbursements of outstanding unpaid drawings under any Letters of Credit or any
reductions in the maximum amount available for drawing under Letters of Credit
taking effect on such date. For purposes of subsection 2.6(a), the Effective
Amount shall be determined without giving effect to any mandatory prepayments
required to be made thereunder that have not been made.
"Eligible Assignee" means (a) a commercial bank organized under the laws of
-----------------
the United States, or any state thereof, and having a combined capital and
surplus of at least $250,000,000; (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $250,000,000,
provided that such bank is acting through a branch or agency located in the
United States; and (c) a Person that is primarily engaged in the business of
commercial banking and that is (i) a Subsidiary of a Bank, (ii) a Subsidiary of
a Person of which a Bank is a Subsidiary, or (iii) a Person of which a Bank is a
Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
--------------------
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
------------------
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, requests, licenses, authorizations and permits of, and
agreements with, any Governmental Authorities, in each case relating to
environmental, health, safety and land use matters.
"Equity Offering" means a public offering of limited partner interests in
---------------
the MLP.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
-----
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
---------------
under common control with the Company within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
-----------
(b) a withdrawal by the Company or any ERISA Affiliate from a Pension Plan
subject to
13
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which
is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete
or partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon the Company or any
ERISA Affiliate.
"Escrow Agreement" means an agreement or agreements entered into by the
----------------
Company pursuant to subsection 8.2(b) or Section 8.20, substantially in the form
of Exhibit H.
---------
"Event of Default" means any of the events or circumstances specified in
----------------
Section 9.1.
"Event of Loss" means any of the following: (a) any material loss,
-------------
destruction or damage of any property, including any destruction of Timber due
to fire, disease or infestation, or (b) any actual condemnation, seizure or
taking, by exercise of the power of eminent domain or otherwise, of any
property, or confiscation of any property or the requisition of the use of such
property, in each case to the extent compensation is paid for such loss, whether
under an insurance policy or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, and regulations
------------
promulgated thereunder.
"Excess Asset Sales Proceeds" has the meaning specified in subsection
---------------------------
8.2(b).
"Excess Timber Harvest Proceeds" has the meaning specified in Section 8.20.
------------------------------
"Existing Credit Agreement" means the Credit Agreement dated as of July 14,
-------------------------
1997 among the Company, Old Services, the several financial institutions parties
thereto (as defined therein, the "Banks") and BofA, as agent for the Banks.
"Federal Funds Rate" means, for any day, the rate set forth in the weekly
------------------
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the preceding Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so published on any
such preceding Business Day, the rate for such day will be the arithmetic mean
as determined by the Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by
each of three leading brokers of Federal funds transactions in New York City
selected by the Agent.
14
"Fee Letter" has the meaning specified in subsection 2.10(a).
----------
"Finance" means U.S. Timberlands Finance Corp., a Delaware corporation and
--------
a Wholly-Owned Subsidiary. "FRB" means the Board of Governors of the Federal
Reserve System, and any Governmental Authority succeeding to any of its
principal functions.
"FRB" Means the Board of Governors of the Federal Reserve System, and any
---
Governmental Authority succeeding to any of its principal functions.
"Funded Debt" means, as calculated for the Company on a consolidated basis
-----------
as of any date of determination, (a) the total Indebtedness of the Company of
the type described in clauses (a), (b), (d) or (e) of the definition of
Indebtedness, excluding therefrom however all obligations representing the
deferred purchase price of property with respect to which recourse is limited to
the asset so acquired, minus (b) cash and Cash Equivalents on the Company on
-----
such date that are not on deposit pursuant to an Escrow Agreement and that are
subject to no Lien other than as Cash Collateral hereunder or a right of set-off
by the relevant depository institution.
"Further Taxes" means any and all present or future taxes, levies,
-------------
assessments, imposts, duties, deductions, fees, withholdings or similar charges
(including, without limitation, net income taxes and franchise taxes), and all
liabilities with respect thereto, imposed by any jurisdiction on account of
amounts payable or paid pursuant to Section 4.1.
"GAAP" means generally accepted accounting principles set forth from time
----
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means any nation or government, any state or other
----------------------
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Gross Interest Expense" means, as calculated for the Company and its
----------------------
Subsidiaries on a consolidated basis for any period as at any date of
determination, cash interest expense for such period (including all commissions,
discounts, fees and other charges under letters of credit and similar
instruments and under any Swap Contract) classified and accounted for in
accordance with GAAP.
"Guaranty Obligation" has the meaning specified in the definition of
-------------------
"Contingent Obligation."
"Holdings Credit Agreement" means the Credit Agreement dated as of August
-------------------------
29, 1996 among ABN AMRO Bank, N.V., as agent, the banks party thereto, and U.S.
15
Timberlands Holdings, L.L.C., as affected by the assignment of the rights of ABN
AMRO Bank, N.V. thereunder to BofA.
"Honor Date" has the meaning specified in subsection 3.3(b).
----------
"Indebtedness" of any Person means, without duplication, (a) all
------------
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the Ordinary Course of Business on ordinary terms); (c)
all non-contingent reimbursement or payment obligations with respect to Surety
Instruments; (d) all outstanding obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred
in connection with the acquisition of property, assets or businesses; (e) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
property acquired by the Person (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property); (f) all obligations with respect to
Capital Leases; (g) all indebtedness referred to in clauses (a) through (f)
above secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness;
and (h) all Guaranty Obligations in respect of indebtedness or obligations of
others of the kinds referred to in clauses (a) through (g) above.
For all purposes of this Agreement, the Indebtedness of any Person shall
include all recourse Indebtedness of any partnership or joint venture or limited
liability company in which such Person is a general partner or a joint venturer
or a member.
"Indemnified Liabilities" has the meaning specified in Section 11.5.
-----------------------
"Indemnified Person" has the meaning specified in Section 11.5.
------------------
"Independent Auditor" has the meaning specified in subsection 7.1(a).
-------------------
"Insolvency Proceeding" means, with respect to any Person, (a) any case,
---------------------
action or proceeding with respect to such Person before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors, or (b)
any general assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.
"Initial Timber Report" means the Quarterly Timber Report delivered on the
---------------------
Closing Date substantially in the form of Exhibit G.
---------
"Interest Payment Date" means, as to (a) any Offshore Rate Loan, the last
---------------------
day of each Interest Period applicable to such Loan, (b) as to any Base Rate
Loan, the last Business Day of each calendar quarter, and (c) with respect to
any Swingline Loan, the
16
last Business Day of each calendar month or, if sooner, the Revolving
Termination Date; provided, however, that if any Interest Period for an Offshore
-------- -------
Rate Loan exceeds three months, the date that falls three months after the
beginning of such Interest Period shall also be an Interest Payment Date.
"Interest Period" means, as to any Offshore Rate Loan, the period
---------------
commencing on the Borrowing Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as an Offshore Rate Loan,
and ending on the date one, two, three or six months thereafter (and any other
period that is 12 months or less and is consented to by each of the Banks in the
given instance) as selected by the Company in its Notice of Borrowing or Notice
of Conversion/Continuation; provided that:
--------
(a) if any Interest Period would otherwise end on a day that is not a
Business Day, that Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of the calendar month at the end of such Interest
Period;
(c) no Interest Period for any W/C Revolving Loan shall extend beyond
the Revolving Termination Date or any date necessary in order to comply
with subsection 2.6(a)(iv);
(d) no Interest Period for any Acquisition Revolving Loan shall
extend beyond the Revolving Termination Date, unless and until the Company
exercises its election to repay the Acquisition Loans in installments in
accordance with subsection 2.7(b), after which Interest Periods may extend
beyond the Revolving Termination Date so long as no Interest Period extends
beyond October 29, 2004; and
(e) no Interest Period applicable to any Acquisition Revolving Loan
after the Revolving Termination Date shall extend beyond any date upon
which any scheduled principal repayment is due pursuant to subsection
2.7(b) unless the aggregate principal amount of Acquisition Revolving Loans
represented by Base Rate Loans or Offshore Rate Loans having Interest
Periods that will expire on or before such date equals or exceeds the
amount of such principal payment.
"IRS" means the Internal Revenue Service, and any Governmental Authority
---
succeeding to any of its principal functions under the Code.
"Issuance Date" has the meaning specified in subsection 3.1(a).
-------------
17
"Issue" means, with respect to any Letter of Credit, to issue or to extend
-----
the expiry of, or to renew or increase the amount of, such Letter of Credit; and
the terms "Issued," "Issuing" and "Issuance" have corresponding meanings.
------ ------- --------
"Issuing Bank" means BofA in its capacity as issuer of one or more Letters
------------
of Credit hereunder, together with any replacement letter of credit issuer
arising under subsection 10.1(b) or Section 10.9.
"Joint Venture" means a single-purpose corporation, partnership, limited
-------------
liability company, joint venture or other similar legal arrangement (whether
created by contract or conducted through a separate legal entity) now or
hereafter formed by the Company or any of its Subsidiaries with another Person
in order to conduct a common venture or enterprise with such Person.
"L/C Advance" means each Bank's participation in any L/C Borrowing in
-----------
accordance with its Pro Rata Share.
"L/C Amendment Application" means an application form for amendment of
-------------------------
outstanding standby or commercial documentary letters of credit as shall at any
time be in use at the Issuing Bank, as the Issuing Bank shall request.
"L/C Application" means an application form for issuances of standby or
---------------
commercial documentary letters of credit as shall at any time be in use at the
Issuing Bank, as the Issuing Bank shall request.
"L/C Borrowing" means an extension of credit resulting from a drawing under
-------------
any Letter of Credit which shall not have been reimbursed on the date when made
nor converted into a Borrowing of W/C Revolving Loans under subsection 3.3(b).
"L/C Commitment" means the commitment of the Issuing Bank to Issue, and the
--------------
commitment of the Banks severally to participate in, Letters of Credit from time
to time Issued or outstanding under Article III, in an aggregate amount not to
exceed on any date the amount of $5,000,000, as the same shall be reduced as a
result of a reduction in the L/C Commitment pursuant to Section 2.6; provided
that the L/C Commitment is a part of the combined W/C Commitments, rather than a
separate, independent commitment.
"L/C Obligations" means at any time the sum of (a) the aggregate undrawn
---------------
amount of all Letters of Credit then outstanding, plus (b) the amount of all
unreimbursed drawings under all Letters of Credit, including all outstanding L/C
Borrowings.
"L/C-Related Documents" means the Letters of Credit, the L/C Applications,
---------------------
the L/C Amendment Applications and any other document relating to any Letter of
Credit, including any of the Issuing Bank's standard form documents for letter
of credit issuances.
"Lending Office" means, with respect to any Bank and the Swingline Bank,
--------------
the office or offices of the Bank specified as its "Lending Office" or "Domestic
Lending Office" or "Offshore Lending Office", as the case may be, on Schedule
--------
11.2, or such
----
18
other office or offices as the Bank may from time to time notify the Company and
the Agent.
"Letters of Credit" means any letters of credit (whether standby letters of
-----------------
credit or commercial documentary letters of credit) Issued by the Issuing Bank
pursuant to Article III.
"Leverage Ratio" means, as calculated quarterly as of the last day of each
--------------
fiscal quarter on a Rolling Four Quarter Basis, the ratio of (a) Funded Debt to
(b) EBITDDA.
"Lien" means any security interest, mortgage, deed of trust, pledge,
----
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a Capital Lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset described in such
financing statement as debtor, under the Uniform Commercial Code or any
comparable law) and any contingent or other agreement to provide any of the
foregoing, but not including the interest of a lessor under an operating lease
or a negative pledge clause.
"Loan" means an extension of credit by a Bank to the Company under Article
----
II or Article III in the form of an Acquisition Revolving Loan, W/C Revolving
Loan or an L/C Advance, which may be a Base Rate Loan or an Offshore Rate Loan
(each a "Type" of Loan) within the Acquisition Revolving Commitment or the W/C
Revolving Commitment.
"Loan Documents" means this Agreement, any Notes, the Fee Letter, the L/C-
--------------
Related Documents, and all other documents delivered to the Agent or any Bank in
connection herewith.
"Majority Banks" means at any time (a) Banks then holding at least 66-2/3%
--------------
of the then aggregate unpaid principal amount of the Loans, or (b) if no Loans
are outstanding but the Commitments are still in effect, Banks then having at
least 66-2/3% of the aggregate Commitments, or (c) if the Commitments have been
terminated and no Loans are outstanding, 66-2/3% of the Commitments as in effect
immediately before such termination.
"Managing Member" means U.S. Timberlands Services Company, L.L.C., a
---------------
Delaware limited liability company formerly named New Services L.L.C., as
managing member under the Operating Agreement.
"Margin Stock" means "margin stock" as such term is defined in Regulation
------------
G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or a
-----------------------
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Company or the Company and its
Subsidiaries taken as a
19
whole; (b) a material impairment of the ability of the Company to perform its
payment or other material obligations under any Loan Document; or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability
against the Company of any Loan Document.
"Maturity Date" means October 29, 2004.
-------------
"Maximum Amount" means, for any calendar year, $15,000,000 for each of
--------------
calendar years 1998, 1999, and 2000, but not in excess of $30,000,000 for all
three of those calendar years, and $10,000,000 for each calendar year
thereafter. Net Proceeds deposited in an escrow account shall be credited
against the Maximum Amount in the year in which such Net Proceeds were so
deposited. The period from the Closing Date through the end of 1997 shall be
considered part of calendar year 1998 for purposes of determining Maximum Amount
for calendar year 1998.
"Merchantable Timber" means any tree which will produce a log (a) at least
-------------------
sixteen (16) feet long, (b) at least five (5) inches in diameter inside the bark
at the small end and (c) at least twenty-five percent (25%) sound.
"Merchantable Timber Inventory" means the aggregate total of Merchantable
-----------------------------
Timber as set forth in the Initial Timber Report as thereafter adjusted for
purchases and sales, Timber Harvest and growth and as set forth in each
Quarterly Timber Report and as verified in and adjusted retroactively pursuant
to each Annual Timber Report. In the case of timber deed, bulk, pay-as-cut, and
stumpage sales, the Timber so sold shall be deemed removed from Merchantable
Timber Inventory when actually severed from the Timberlands.
"MLP" means U.S. Timberlands Company, L.P., a Delaware limited partnership.
---
"Multiemployer Plan" means a "multiemployer plan", within the meaning of
------------------
Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate makes,
is making, or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions.
"Net Income" means, as calculated for the Company and its Subsidiaries on a
----------
consolidated basis for any period as at any date of determination, the net
income (or loss) of the Company and its Subsidiaries for such period taken as a
single accounting period.
"Net Interest Expense" means, as calculated on a consolidated basis for the
--------------------
Company and its Subsidiaries for any period as at any date of determination, (a)
Gross Interest Expense, minus (b) interest income for that period and Swap
Contract payments received.
"Net Issuance Proceeds" means, as to any issuance of equity or debt
---------------------
securities by any Person, cash proceeds received or receivable by such Person in
connection therewith, net of reasonable out-of-pocket costs and expenses,
including underwriting spread, paid or incurred in connection therewith in favor
of any Person not an Affiliate of such Person, such costs and expenses not to
exceed 8% of the gross proceeds of such issuance.
20
"Net Proceeds" means, (x) as to any sale of Timberlands or other assets
------------
(other than resulting from Timber Harvest) by a Person, proceeds in cash, checks
or other cash equivalent financial instruments as and when received by such
Person, net of: (a) the direct costs relating to such sale excluding amounts
------
payable to such Person or any Affiliate of such Person, except (in the case the
Company or its Subsidiaries) as are paid or payable to any such Affiliate in
compliance with Section 8.6 and as have been (except in the case of payments
between the Company and its Subsidiaries) approved in advance by the Majority
Banks, (b) sale, use or other transaction taxes paid or payable by such Person
as a direct result thereof, and (c) amounts required to be applied to repay
principal, interest and prepayment premiums and penalties on Indebtedness
secured by a Lien on the asset which is the subject of such sale; (y) as to any
Event of Loss, proceeds paid on account of any Event of Loss, net of (a) all
money actually applied to repair or reconstruct the damaged property or property
affected by the Event of Loss, (b) all of the costs and expenses reasonably
incurred in connection with the collection of such proceeds, award or other
payments, and (c) any amounts retained by or paid to parties having superior
rights to such proceeds, awards or other payments; and (z) as to any Timber
Harvest in excess of an applicable Timber Harvest limitation set forth in
Section 8.20, the net proceeds of that portion of such Timber Harvest in excess
of such limitation based upon average prices received on the sale of all Timber
subject to Timber Harvest during the relevant calendar year and a reasonable
allocation of direct cash expenses incurred in connection with the harvesting
and sale of Timber during that year, in each case multiplied by a fraction the
numerator of which is the amount of such Timber Harvest in excess of such
limitation and the denomintor of which is the entire amount of such Timber
Harvest.
"Note" means any promissory note executed by the Company in favor of a Bank
----
pursuant to subsection 2.2(b), in substantially the form of Exhibit F- 1, in the
------------
case of an Acquisition Revolving Note or Exhibit F -2, in the case of a W/C
------------
Revolving Note, and "Notes" means all such Notes, collectively.
"Notice of Borrowing" means a notice in substantially the form of Exhibit
------------------- -------
A.
-
"Notice of Conversion/Continuation" means a notice in substantially the
---------------------------------
form of Exhibit B.
---------
"Obligations" means all advances, debts, liabilities, obligations,
-----------
covenants and duties arising under any Loan Document owing by the Company to any
Bank (including the Issuing Bank and the Swingline Bank), the Agent, or any
Indemnified Person, whether direct or indirect (including those acquired by
assignment of rights under the Loan Documents), absolute or contingent, due or
to become due, now existing or hereafter arising.
"Offshore Rate" means, for any Interest Period, with respect to Offshore
-------------
Rate Loans comprising part of the same Borrowing, the rate of interest per annum
(rounded upward to the next 1/16th of 1%) determined by the Agent as the rate of
interest at which dollar deposits in the approximate amount of the amount of the
Loan to be made or continued as, or converted into, an Offshore Rate Loan by the
Bank that acts as Agent
21
and having a maturity comparable to such Interest Period would be offered to
major banks in the London interbank market at their request at approximately
11:00 a.m. (London time) two Business Days prior to the commencement of such
Interest Period.
"Offshore Rate Loan" means a Loan that bears interest based on the Offshore
------------------
Rate.
"Old Services" means U.S. Timberlands Management Company, L.L.C., a
------------
Delaware limited liability company formerly named U.S. Timberlands Services
Company, L.L.C.
"Operating Agreement" means the Second Amended and Restated Operating
-------------------
Agreement of the Company, dated as of November 19, 1997.
"Operating Lease" means, with respect to any Person, any lease of any
---------------
property by such Person as lessee (including leases which may be terminated by
the lessee at any time) that is, or should be, classified and accounted for as
an "operating lease" on the balance sheets, or notes thereto, of such Person
prepared in accordance with GAAP.
"Ordinary Course of Business" means, in respect of the Company or any
---------------------------
Subsidiary, as the case may be, the ordinary course of such Person's business,
as conducted by such Person in accordance with past practice and undertaken by
such Person in good faith and not for purposes of evading any covenant or
restriction in any Loan Document.
"Organization Documents" means, (a) for any corporation, the certificate or
----------------------
articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable resolutions of the board of
directors (or any committee thereof) of such corporation; (b) for any limited
partnership, the certificate of limited partnership and partnership agreement,
or (c) for any limited liability company, the certificate of formation,
operating agreement, resolutions, and membership list.
"Other Taxes" means any present or future stamp, court or documentary taxes
-----------
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect to, this Agreement or
any other Loan Documents.
"Participant" has the meaning specified in subsection 11.8(d).
-----------
"Partnership Agreement" means the Agreement of Limited Partnership of the
---------------------
MLP.
"PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental
----
Authority succeeding to any of its principal functions under ERISA.
22
"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA)
------------
subject to Title IV of ERISA which the Company sponsors, maintains, or to which
it makes, is making, or is obligated to make contributions, or in the case of a
multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5) plan years.
"Permitted Business" means any business engaged in by the Company on the
------------------
Closing Date, and any business substantially similar or related to any such
business located (other than soliciting and consummating purchases of Timber or
Timberlands outside of the United States) in the United States, which shall not
include pulp or paper manufacturing.
"Permitted Liens" has the meaning specified in Section 8.1.
---------------
"Permitted Swap Obligations" means all obligations (contingent or
--------------------------
otherwise) of the Company or any Subsidiary existing or arising under Swap
Contracts, provided that each of the following criteria is satisfied: (a) such
obligations are (or were) entered into by such Person in the Ordinary Course of
Business for the purpose of directly mitigating risks associated with
liabilities, commitments or assets held or reasonably anticipated by such
Person, or changes in the value of securities issued by such Person in
conjunction with a securities repurchase program not otherwise prohibited
hereunder, and not for purposes of speculation or taking a "market view;" (b)
such Swap Contracts do not contain any provision ("walk-away" provision)
exonerating the non-defaulting party from its obligation to make payments on
outstanding transactions to the defaulting party, and (c) the counterparty to
such Swap Contract is a Bank or an Affiliate of a Bank.
"Person" means an individual, partnership, corporation, limited liability
------
company, business trust, joint stock company, trust, unincorporated association,
joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA)
----
which the Company sponsors or maintains or to which the Company makes, is
making, or is obligated to make contributions and includes any Pension Plan.
"Planned Volume" means, as of the Closing Date, 125 million board feet per
--------------
calendar year of Timber Harvest. In the event of the acquisition by the Company
of Merchantable Timber or Timberlands (other than Timber or Timberlands acquired
with Excess Timber Harvest Proceeds or by exchange for other Timber or
Timberlands), Planned Volume will be increased each year for 10 years by 10% of
the volume of Merchantable Timber so acquired; provided that if such acquisition
of Merchantable Timber or Timberlands is made under a cutting contract with a
term of less than 10 years, Planned Volume will be increased for each year
during the term of the cutting contract by a number of board feet equal to the
number of board feet so acquired multiplied by the quotient of 100% divided by
the number of years in the cutting contract. In the event of a disposition
(including by Event of Loss) with respect to Merchantable Timber or Timberlands
(other than Timber Harvest with respect thereto), Planned Volume will be reduced
by 10% of the volume of Merchantable Timber so disposed of. In the event of
23
Timber Harvest in any year in excess of the limitations set forth in Section
8.20, Planned Volume will be reduced by 10% of the amount of such excess.
"Pro Forma EBITDDA" means, at any date of determination, on a Rolling Four
-----------------
Quarter Basis, the sum of the following calculated on a pro forma basis for the
Company and its Subsidiaries on a consolidated basis for the four fiscal quarter
period ending on the last day of the most recent quarter for which financial
reports pursuant to subsections 7.1(a) and (b) and a Compliance Certificate
pursuant to subsection 7.2(b) having been delivered:
(i) EBITDDA; and
(ii) plus or minus, as applicable, in connection with any
---- -----
timberlands to be acquired by the Company with the proceeds of an
Acquisition Revolving Loan or previously acquired within such four fiscal
quarters, an amount equal to a good faith estimate of such additional
amounts that would be included in clause (i) above had such timberlands
been owned by the Company for such four fiscal quarters, as certified
(together with such supporting detail as the Majority Banks may reasonably
request) by the chief financial officer of the Company based upon such
chief financial officer's good faith estimates of applicable revenues and
expenses arising from such timberlands and assuming aggregate Timber
Harvest in an amount that does not require proceeds to be placed in an
escrow account pursuant to Section 8.20.
"Pro Forma Interest Expense" means, at any date of determination, on a
--------------------------
Rolling Four Quarter Basis, the sum of the following calculated for the Company
and its Subsidiaries on a consolidated basis for the four fiscal quarter period
ending on the last day of the most recent quarter for which financial reports
pursuant to subsections 7.1(a) and (b) and a Compliance Certificate pursuant to
subsection 7.2(b) have been delivered:
(a) interest expense payable during such four fiscal quarter period
on all Indebtedness of the Company and its Subsidiaries; plus
----
(b) interest expense that would have been payable during such four
fiscal quarter period in respect of (i) any Indebtedness proposed to be
incurred on such date of determination, including any Loan requested
hereunder or other Senior Debt, and (ii) Indebtedness incurred after the
end of such four fiscal quarter period and before such date of
determination, in each case based upon the interest rate applicable on such
date of determination to such Indebtedness and giving effect as of the
beginning of such four fiscal quarter period (A) to the incurrence of all
such Indebtedness described in clauses (i) and (ii), and (B) to the
application of any such Indebtedness to the substantially concurrent
repayment of any other Indebtedness outstanding during such four fiscal
quarter period.
"Pro Rata Share" means, as to any Bank at any time, the percentage
--------------
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Bank's combined Commitments divided by the aggregate Commitments,
or, if the Commitments
24
have expired or been terminated, the percentage equivalent (expressed as a
decimal, rounded to the ninth decimal place) at such time of the Effective
Amount of such Bank's Loans divided by the aggregate Effective Amount of all
Loans. For purposes of computing Pro Rata Share , the L/C Commitment and the
Swingline Commitment shall not increase the Commitment of the Issuing Bank or
Swingline Bank, respectively.
"Quarterly Timber Report" has the meaning specified in subsection 7.2(e).
-----------------------
"Related Entities" means the Managing Member and the MLP.
----------------
"Replacement Bank" has the meaning specified in Section 4.8.
----------------
"Reportable Event" means, any of the events set forth in Section 4043(c) of
----------------
ERISA or the regulations thereunder, other than any such event for which the 30-
day notice requirement under ERISA has been waived in regulations issued by the
PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
------------------
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case legally binding upon the Person or any of
its property or to which the Person or any of its property is subject.
"Responsible Officer" means any managing director, chief executive officer,
-------------------
or chief financial officer of the managing member of the Managing Member acting
in its capacity as Managing Member on behalf of the Company.
"Restricted Payments" has the meaning specified in Section 8.11.
-------------------
"Retail Timberlands Value" means, for any date, the product of (a) the
------------------------
arithmetic average price per thousand board feet of sawlogs weighted by grade
and species (as reported by the most recent California State Board of
Equalization Timber Value Area 6 report or, if such report is unavailable, an
outside index or reporting service acceptable to the Agent and the Majority
Banks) (net of any applicable log and haul costs per thousand board feet during
the twelve calendar months next preceding such date) (the foregoing shall be
completed for future fiscal quarters in the same fashion as reflected for the
fiscal quarter ending September 30, 1997 in the Initial Timber Report); and (b)
the Merchantable Timber Inventory of the Company and its Subsidiaries as
adjusted on or most recently before such date pursuant to the definition thereof
in this Section 1.1.
"Revolving Termination Date" means the earlier to occur of:
--------------------------
(a) October 31, 2000; and
(b) the date on which the W/C Revolving Commitments and Acquisition
Revolving Commitments terminate in accordance with the provisions of this
Agreement.
"Rolling Four Quarter Basis" means with respect to the calculation of any
--------------------------
financial ratio in Article VIII, such ratio as measured on the last day of the
most recently
25
completed fiscal quarter for the period comprising such fiscal quarter and the
three preceding fiscal quarters, provided that (i) for the fiscal quarters
ending September 30 and December 31, 1997, any calculation of Pro Forma EBITDDA
or Pro Forma Interest Expense shall be determined by multiplying the actual Pro
Forma EBITDDA or Pro Forma Interest Expense for that fiscal quarter by four (4),
(ii) for the fiscal quarter ending on March 31, 1998, any calculation of Pro
Forma EBITDDA or Pro Forma Interest Expense shall be determined by multiplying
the actual Pro Forma EBITDDA or Pro Forma Interest Expense for that fiscal
quarter and the prior fiscal quarter by two (2), and (iii) for the fiscal
quarter ending on June 30, 1998, any calculation of Pro Forma EBITDDA or Pro
Forma Interest Expense shall be determined by multiplying the actual Pro Forma
EBITDDA or Pro Forma Interest Expense for the period of such quarter and the two
preceding quarters by one and one-third (1-1/3).
"S-1" means the Registration Statement on Form S-1, dated as of August 4,
---
1997, as amended, filed by the MLP with the SEC.
"SEC" means the Securities and Exchange Commission, or any Governmental
---
Authority succeeding to any of its principal functions.
"Senior Debt" means Indebtedness of the Company under the Senior Notes and
-----------
the Obligations other than L/C Obligations constituting the undrawn amount of
outstanding Letters of Credit.
"Senior Notes" means the notes issued pursuant to the Senior Note
------------
Agreement.
"Senior Note Agreement" means the Indenture dated as of November 19, 1997,
---------------------
among the Company, Finance, and State Street Bank & Trust Company, as trustee.
"Subsidiary" of a Person means any corporation, association, partnership,
----------
limited liability company, joint venture or other business entity of which more
than 50% of the voting stock, membership interests or other equity interests (in
the case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Company.
"Surety Instruments" means all letters of credit (including standby and
------------------
commercial), banker's acceptances, bank guaranties, shipside bonds, surety bonds
and similar instruments.
"Swap Contract" means any agreement, whether or not in writing, relating to
-------------
any transaction that is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap or option, bond,
note or xxxx option, interest rate option, forward foreign exchange transaction,
cap, collar or floor transaction, currency swap, cross-currency rate swap,
swaption, currency option or any other, similar transaction (including any
option to enter into any of the foregoing) or any combination of the foregoing,
and, unless the context otherwise clearly requires, any master agreement
relating to or governing any or all of the foregoing.
26
"Swap Termination Value" means, in respect of any one or more Swap
----------------------
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a) the amount(s) determined as the
xxxx-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include any Bank).
"Swingline Bank" means BofA or its assignee under Section 11.8.
--------------
"Swingline Clean-Up Day" has the meaning specified in subsection 2.7(c).
----------------------
"Swingline Commitment" has the meaning specified in Section 2.9.
--------------------
"Swingline Loan" has the meaning specified in Section 2.9.
--------------
"Taxes" means any and all present or future taxes, levies, assessments,
-----
imposts, duties, deductions, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of each Bank and the
Agent, respectively, taxes imposed on or measured by its net income by the
jurisdiction (or any political subdivision thereof) under the laws of which such
Bank or the Agent, as the case may be, is organized or maintains a lending
office.
"Timber" means all crops and all trees, timber, whether severed or
------
unsevered and including standing and down timber, stumps and cut timber, and
logs, wood chips and other forest products, whether now located on or hereafter
planted or growing in or on the Timberlands or otherwise or now or hereafter
removed from the Timberlands or otherwise for sale or other disposition.
"Timber Harvest" means the harvest of Merchantable Timber from the
--------------
Timberlands or the disposition of the rights of the Company or any Subsidiary to
Timber on the Timberlands, including by means of timber deed, bulk, pay-as-cut,
and stumpage sales. In the case of timber deed, bulk, pay-as-cut, and stumpage
sales, the Timber so sold shall be deemed harvested for purposes of this
definition in equal monthly amounts over the life of the contract, regardless of
when the purchaser actually xxxxxx the Timber.
"Timberlands" means, at any date of determination, all real property owned
-----------
by or leased to the Company or any Subsidiary that is suitable for timber
production.
"Type" has the meaning specified in the definition of "Loan."
----
"Unfunded Pension Liability" means the excess of a Plan's benefit
--------------------------
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
27
"United States" and "U.S." each means the United States of America.
------------- ----
"Wholly-Owned Subsidiary" means any corporation in which (other than
-----------------------
directors' qualifying shares required by law) 100% of the capital stock of each
class having ordinary voting power, and 100% of the capital stock of every other
class, in each case, at the time as of which any determination is being made, is
owned, beneficially and of record, by the Company, or by one or more of the
other Wholly-Owned Subsidiaries, or both.
"W/C Revolving Commitment" has the meaning specified in subsection 2.1(b).
------------------------
"W/C Revolving Loans" has the meaning specified in subsection 2.1(b).
-------------------
1.2 Other Interpretive Provisions.
-----------------------------
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including";
the words "to" and "until" each mean "to but excluding", and the word
"through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent restatements, amendments and other
modifications thereto, but only to the extent such restatements, amendments and
other modifications are not prohibited by the terms of any Loan Document, and
(ii) references to any statute or regulation are to be construed as including
all statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
28
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms. Unless otherwise expressly provided,
any reference to any action of the Agent or the Banks by way of consent,
approval or waiver shall be deemed modified by the phrase "in its/their sole
discretion."
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Company
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Banks or the Agent merely because of the
Agent's or Banks' involvement in their preparation.
1.3 Accounting Principles.
---------------------
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.
ARTICLE II
THE CREDITS
-----------
2.1 Amounts and Terms of Commitments.
--------------------------------
(a) The Acquisition Credit.
----------------------
Each Bank severally agrees, on the terms and conditions set forth
herein, to make loans to the Company (each such loan, an "Acquisition Revolving
---------------------
Loan") from time to time on any Business Day from the Closing Date to the
----
Revolving Termination Date in an aggregate amount not to exceed the amount set
forth opposite such Bank's name under the heading "Acquisition Revolving
Commitment" on Schedule 2.1 (such Bank's "Acquisition Revolving Commitment");
------------ --------------------------------
provided, however, after giving effect to any Borrowing of Acquisition Revolving
-------- -------
Loans, the Effective Amount of all Acquisition Revolving Loans shall not at any
time exceed the aggregate Acquisition Revolving Commitments. Within the limits
of each Bank's Acquisition Revolving Commitment, and subject to the other terms
and conditions hereof, the Company may borrow under this subsection 2.1(a),
prepay under Section 2.5 and reborrow under this subsection 2.1(a).
(b) The Working Capital Credit.
--------------------------
Each Bank severally agrees, on the terms and conditions set forth
herein, to make loans to the Company (each such loan, a "W/C Revolving Loan")
------------------
from time to time on any Business Day during the period from the Closing Date to
the Revolving
29
Termination Date, in an aggregate amount not to exceed at any time
outstanding, together with such Bank's Pro Rata Share of Swingline Loans and L/C
Obligations outstanding at such time, the amount set forth opposite such Bank's
name under the heading "W/C Revolving Commitment" on Schedule 2.1 (such Bank's
------------
"W/C Revolving Commitment"); provided, however, that, after giving effect to any
------------------------ -------- -------
Borrowing of W/C Revolving Loans, (1) the Effective Amount of all W/C Revolving
Loans, Swingline Loans and L/C Obligations shall not at any time exceed the
aggregate W/C Revolving Commitments. Within the limits of each Bank's W/C
Revolving Commitment, and subject to the other terms and conditions hereof, the
Company may borrow under this subsection 2.1(b), prepay under Section 2.5 and
reborrow under this subsection 2.1(b).
2.2 Evidence of Obligations.
-----------------------
(a) The Loans made by each Bank (including the Swingline Bank) shall
be evidenced by one or more loan accounts or records maintained by such Bank in
the ordinary course of business. The loan accounts or records maintained by the
Agent, the Issuing Bank, the Swingline Bank, and each Bank shall be conclusive
absent manifest error of the amount of the Loans made by the Banks to the
Company and the interest and payments thereon. Any failure so to record or any
error in doing so shall not, however, limit or otherwise affect the obligation
of the Company hereunder to pay any amount owing with respect to the Loans or
Letters of Credit.
(b) Upon the request of any Bank made through the Agent, the Loans
made by such Bank may be evidenced by one or more Notes, instead of or in
addition to accounts. Each such Bank shall endorse on the schedules annexed to
its Note(s) the date, amount and maturity of each Loan made by it and the amount
of each payment of principal made by the Company with respect thereto. Each such
Bank is irrevocably authorized by the Company to endorse its Note(s) and each
Bank's record shall be conclusive absent manifest error; provided, however, that
--------- -------
the failure of a Bank to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of the
Company hereunder or under any such Note to such Bank.
2.3 Procedure for Borrowing.
-----------------------
(a) Each Borrowing shall be made upon the Company's irrevocable
written notice delivered to the Agent in the form of a Notice of Borrowing
(which notice must be received by the Agent prior to (i) 9:00 a.m. (San
Francisco time) three Business Days prior to the requested Borrowing Date, in
the case of Offshore Rate Loans; or (ii) 8:30 a.m. (San Francisco time) on the
requested Borrowing Date, in the case of Base Rate Loans), specifying:
(i) the amount of the Borrowing, which shall be in an
aggregate minimum amount of $2,000,000 or any multiple of $500,000 in
excess thereof;
30
(ii) the requested Borrowing Date, which shall be a Business
Day;
(iii) the Type of Loans comprising the Borrowing and whether
such Borrowing shall be of W/C Revolving Loans, Acquisition Revolving
Loans, or both; and
(iv) the duration of the Interest Period applicable to such
Loans included in such notice. If the Notice of Borrowing
fails to specify the duration of the Interest Period for
any Borrowing comprising Offshore Rate Loans, such
Interest Period shall be one month.
Promptly upon receipt of any such Notice of Borrowing, the Agent shall notify
the Banks of the contents of such Notice of Borrowing.
(b) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Agent for the account of the Company at the Agent's
Payment Office by 11:00 a.m. (San Francisco time) on the Borrowing Date
requested by the Company in funds immediately available to the Agent. Except as
provided in the next sentence, the proceeds of all Loans will then be made
available to the Company by the Agent at such office by crediting the account of
the Company on the books of BofA with the aggregate of the amounts made
available to the Agent by the Banks and in like funds as received by the Agent
by 1:00 p.m. (San Francisco time) on the Borrowing Date. The proceeds of
Acquisition Revolving Loans may, at the election of the Agent or of the Majority
Banks, be made available to the Company by wire transfer pursuant to such escrow
arrangements as the Agent shall determine acceptable to confirm the satisfaction
of the conditions precedent to such Loans, in like funds as received by the
Agent.
(c) After giving effect to any Borrowing, unless the Agent shall
otherwise consent, there may not be more than five (5) different Interest
Periods in effect.
2.4 Conversion and Continuation Elections.
-------------------------------------
(a) The Company may, upon irrevocable written notice to the Agent in
accordance with subsection 2.4(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the case
of Offshore Rate Loans, to convert any such Loans (or any part thereof in
an amount not less than $2,000,000, or that is in an integral multiple of
$500,000 in excess of $2,000,000) into Loans of any other Type; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any Offshore Rate Loans having Interest Periods
expiring on such day (or any part thereof in an amount not less than
$2,000,000, or that is in an integral multiple of $500,000 in excess of
$2,000,000);
31
provided that if at any time the aggregate amount of Offshore Rate Loans in
-------- ----
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $2,000,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Company to continue such Loans as, and convert such Loans into, Offshore
Rate Loans, as the case may be, shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation to
be received by the Agent not later than (i) 9:00 a.m. (San Francisco time) at
least three Business Days in advance of the Conversion/Continuation Date, if the
Loans are to be converted into or continued as Offshore Rate Loans; and (ii)
8:30 a.m. (San Francisco time) on the Conversion/Continuation Date, if the Loans
are to be converted into Base Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or
continued;
(C) the Type of Loans resulting from the proposed
conversion or continuation; and
(D) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans or if any Default or Event
of Default then exists, the Company shall be deemed to have elected to convert
such Offshore Rate Loans into Base Rate Loans effective as of the expiration
date of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of a
Notice of Conversion/Continuation for Loans, or, if no timely notice is provided
by the Company, the Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Loans held by
each Bank with respect to which the notice was given.
(e) Unless the Majority Banks otherwise consent, during the existence
of a Default or Event of Default, the Company may not elect to have a Loan
converted into or continued as a Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
unless the Agent shall otherwise consent, there may not be more than five (5)
different Interest Periods in effect with respect to Loans.
32
2.5 Optional Prepayments.
--------------------
Subject to Section 4.4, the Company may, at any time or from time to time,
upon not less than (a) in the case of Offshore Rate Loans, three Business Days'
irrevocable notice to the Agent delivered by 9:00 a.m. (San Francisco time), (b)
in the case of Base Rate Loans, one Business Day's irrevocable notice to the
Agent, and (c) in the case of Swingline Loans, notice to the Agent by 8:30 a.m.
on the same day, ratably prepay Loans in whole or in part, in minimum amounts of
$2,000,000 or any multiple of $500,000 in excess thereof or, in the case of
Swingline Loans, in minimum amounts of $250,000 or any multiple of $100,000 in
excess thereof. Such notice of prepayment shall specify the date and amount of
such prepayment, the Type(s) of Loans to be prepaid, and whether such Loans are
Swingline Loans, W/C Revolving Loans or Acquisition Revolving Loans. The Agent
will promptly notify each Bank of its receipt of any such notice with respect to
W/C Revolving Loans and Acquisition Revolving Loans, and of such Bank's Pro Rata
Share of such prepayment. The payment amount specified in such notice shall be
due and payable on the date specified therein, together with accrued interest to
each such date on the amount prepaid and any amounts required pursuant to
Section 4.4. Optional prepayments of Acquisition Revolving Loans, after the
Company exercised or declined to exercise its option to repay the Acquisition
Revolving Loans in installments pursuant to Section 2.7 shall be applied to the
remaining principal repayments of the Acquisition Revolving Loans in the inverse
order of their maturity.
2.6 Mandatory Prepayments of Loans; Mandatory Commitment Reductions.
---------------------------------------------------------------
(a) Mandatory Prepayments.
---------------------
(i) (A) The Company shall apply all Excess Asset Sales Proceeds
that the Company has elected not to reinvest in accordance with subsection
8.2(b) and all Excess Timber Harvest Proceeds that the Company has elected not
to reinvest in accordance with Section 8.20 to the prepayment, purchase, or Cash
Collateralization of such Senior Debt as the Company may elect; provided that,
--------
in each case, unless no Loans or Letters of Credit are outstanding hereunder,
the Company may not prepay or purchase Senior Debt other than the Obligations
pursuant to this subsection 2.6(a)(i)(A) unless the Company shall also prepay or
Cash Collateralize the Obligations in an aggregate amount as shall be necessary
to cause the Banks to share such prepayment, purchase, or Cash Collateralization
with the other Senior Debt at least pro rata. Prepayments to be made with
respect to the Loans pursuant to this subsection 2.6(a)(i) shall be applied
first, to prepay any Acquisition Revolving Loans that are Base Rate Loans then
-----
outstanding, second, at the Company's option, to Cash Collateralize (which cash
------
collateral shall be applied on the maturity date of their Interest Periods to
prepay then outstanding Acquisition Revolving Loans that are Offshore Rate Loans
in the order of their maturities) or to prepay any Acquisition Revolving Loans
that are Offshore Rate Loans (in the order of their maturities), third, to
-----
prepay any W/C Revolving Loans that are Base Rate Loans, and fourth, at the
------
Company's option, to Cash Collateralize (which cash collateral shall be applied
on the maturity date of their Interest Periods to prepay then outstanding W/C
Revolving Loans that are Offshore Rate Loans in the order of their
33
maturities) or to prepay any W/C Revolving Loans that are Offshore Rate Loans
(in the order of their maturities).
(ii) Subject to payment of any amounts owing under Section 4.4,
if the Effective Amount of all W/C Revolving Loans, L/C Obligations, and
Swingline Loans then outstanding exceeds the aggregate W/C Revolving
Commitments, the Company shall immediately, and without notice or demand, prepay
the outstanding principal amount of the W/C Revolving Loans by an amount equal
to the applicable excess. Any such prepayment shall be applied first, to prepay
-----
any W/C Revolving Loans that are Base Rate Loans, second, to Cash Collateralize
------
(which cash collateral shall be applied on the maturity date of their Interest
Periods to prepay then outstanding W/C Revolving Loans that are Offshore Rate
Loans in the order of their maturities) or to prepay any W/C Revolving Loans
that are Offshore Rate Loans (in the order of their maturities), and third to
-----
Cash Collateralize any L/C Obligations.
(iii) Subject to payment of any amounts owing under Section 4.4,
if the Effective Amount of all Acquisition Revolving Loans then outstanding
exceeds the aggregate Acquisition Revolving Commitments, the Company shall
immediately, and without notice or demand, prepay the outstanding principal
amount of the Acquisition Revolving Loans by an amount equal to the applicable
excess. Any such prepayment shall be applied first, to prepay any Acquisition
-----
Revolving Loans that are Base Rate Loans, second, to Cash Collateralize (which
------
cash collateral shall be applied on the maturity date of their Interest Periods
to prepay then outstanding Acquisition Revolving Loans that are Offshore Rate
Loans in the order of their maturities) or to prepay any Acquisition Revolving
Loans that are Offshore Rate Loans (in the order of their maturities).
(iv) The Company shall repay the W/C Revolving Loans and
Swingline Loans from time to time so as to cause, at the end of any calendar
month, there to have been a period of at least 30 consecutive days during the
prior 12 calendar months when there were no W/C Revolving Loans and Swingline
Loans outstanding.
(v) After the Revolving Termination Date, all prepayments
shall be applied in the inverse order of maturity to the principal payments
required under subsection 2.7(b)(ii).
(vi) Upon the occurrence of a Change of Control, the Company
shall notify the Agent thereof and, upon demand by the Agent at the direction of
the Required Lenders within 90 days after the later of such Change of Control or
receipt of such notice, the Company shall repay the Loans in full within 10 days
after such demand.
(b) Mandatory Commitment Reductions.
-------------------------------
(i) The aggregate Acquisition Revolving Commitments and
aggregate W/C Revolving Commitments, in that order of priority, shall be
permanently reduced from time to time by the amount of any mandatory prepayment
or Cash Collateralization of the Loans required by subsection 2.6(a); provided
that to the extent a sale of assets, an
34
Event of Loss or Timber Harvest shall not result in any prepayment of the Loans
pursuant to subsection 2.6(a) because the Loans have been repaid in full, first,
the aggregate Acquisition Revolving Commitment and, second, the aggregate W/C
Revolving Commitment, shall be permanently reduced in an amount equal to the
amount that would otherwise be applied to a prepayment or Cash Collateralization
of the Loans by operation of subsection 2.6(a). Such permanent reduction shall
take effect upon the date the corresponding mandatory prepayment is or would (if
Loans were outstanding) be required by subsection 2.6(a) or, in the case of
funds actually deposited as Cash Collateral under that subsection, upon the
application of such cash collateral to the W/C Revolving Loans or Acquisition
Revolving Loans, as applicable.
(ii) Upon the occurrence of a Change of Control, the Company
shall notify the Agent thereof and, upon notice to the Company by the Agent at
the direction of the Required Lenders within 90 days after the later of such
Change of Control or receipt of such notice of Change of Control, the aggregate
Acquisition Revolving Commitment and the aggregate W/C Revolving Commitment
shall be permanently reduced to $0 and terminated on the date 10 days after such
demand.
(iii) Upon any permanent reduction in the aggregate Acquisition
Revolving Commitments or aggregate W/C Revolving Commitments, the corresponding
Acquisition Revolving Commitment or W/C Revolving Commitment, as the case may
be, of each Bank shall automatically be reduced by an amount equal to such
Bank's ratable share of the reduction, effective as of the earlier of the date
that any corresponding prepayment is made or the date by which such prepayment
is due and payable hereunder. All accrued commitment fees to, but not including
the effective date of any reduction or termination of the Commitments shall be
paid on the effective date of such reduction or termination.
(iv) No reduction in the W/C Revolving Commitments pursuant to
Sections 2.5 or 2.6 shall reduce the L/C Commitment unless and until the W/C
Revolving Commitments have been reduced to the amount of the L/C Commitment;
thereafter, any reduction in the W/C Commitments pursuant to Sections 2.5 or 2.6
shall equally reduce the L/C Commitment.
(v) No reduction in the W/C Revolving Commitments pursuant to
Sections 2.5 or 2.6 shall reduce the Swingline Commitment unless and until the
W/C Revolving Commitments have been reduced to the amount of the Swingline
Commitment; thereafter, any reduction in the W/C Revolving Commitment pursuant
to Sections 2.5 or 2.6 shall equally reduce the Swingline Commitment.
2.7 Repayment.
---------
(a) The W/C Revolving Credit.
------------------------
The Company shall repay on the Revolving Termination Date the
aggregate outstanding principal amount of W/C Revolving Loans outstanding on
such date.
35
(b) The Acquisition Revolving Credit.
--------------------------------
(i) Repayment on Revolving Termination Date. Unless the Company
---------------------------------------
shall have exercised its election to repay the Acquisition Revolving Loans
outstanding on the Revolving Termination Date in installments pursuant to
and in strict compliance with this subsection 2.7(b), the Company shall
repay to the Banks in full on the Revolving Termination Date the aggregate
principal amount of any Acquisition Revolving Loans outstanding on such
date.
(ii) Installment Election. So long as (A) no Default or Event of
--------------------
Default then exists, and (B) the representations and warranties in Article
VI are true and correct with the same effect as if made on and as of such
date (except to the extent such representations and warranties expressly
refer to an earlier date, in which case they are true and correct as of
such earlier date), in each case of clauses (A) and (B) above on the date
of such election and on the Revolving Termination Date, at least 60 days
before the Revolving Termination Date the Company may, in lieu of repaying
Acquisition Revolving Loans on the Revolving Termination Date under
subsection 2.7(b)(i), elect to repay the aggregate principal amount of
Acquisition Revolving Loans outstanding on the Revolving Termination Date
in sixteen (16) consecutive quarterly equal installments, each in an amount
equal to one-sixteenth of the Effective Amount of the Acquisition Revolving
Loans on the Revolving Termination Date and payable on the last Business
Day of each January, April, July and October through the Maturity Date,
commencing on January 31, 2001. The Agent shall promptly deliver a copy of
such notice to the Banks.
(c) The Swingline Credit.
--------------------
The Company shall repay Swingline Loans to the Swingline Bank on each
Business Day upon which there have been, for the seven (7) immediately preceding
Business Days, outstanding Swingline Loans (the "Swingline Clean-Up Day"), which
----------------------
Swingline Loans may not be reborrowed until such Swingline Clean-Up Day has
ended.
(d) Letters of Credit.
-----------------
The Company shall reimburse the Issuing Bank on or before the date
each drawing under a Letter of Credit is to be paid by the Issuing Bank for the
amount of such drawing.
2.8 Interest.
--------
(a) Each Loan shall bear interest on the outstanding principal amount
thereof from the applicable Borrowing Date at a rate per annum equal to the
Offshore Rate or the Base Rate, as the case may be (and subject to the Company's
right to convert to other Types of Loans under Section 2.4), plus the Applicable
----
Margin.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of
Offshore Rate
36
Loans under Section 2.5 or 2.6 for the portion of the Offshore Rate Loans so
prepaid and upon payment (including prepayment) in full thereof and, during the
the existence of any Event of Default, interest shall be paid on demand
of the Agent at the request or with the consent of the Majority Banks.
(c) Notwithstanding subsection (a) of this Section, while any Event
of Default exists or after acceleration, the Company shall pay interest (after
as well as before entry of judgment thereon to the extent permitted by law) on
the principal amount of all outstanding Obligations, at a rate per annum which
is determined by adding 2% per annum to the Applicable Margin then in effect for
such Loans and, in the case of Obligations not subject to an Applicable Margin,
at a rate per annum equal to the Base Rate plus 2%; provided, however, that, on
---- -------- -------
and after the expiration of any Interest Period applicable to any Offshore Rate
Loan outstanding on the date of occurrence of such Event of Default or
acceleration, the principal amount of such Loan shall, during the continuation
of such Event of Default or after acceleration, bear interest at a rate per
annum equal to the Base Rate plus 2% plus the Applicable Margin for Base Rate
---- ----
Loans.
(d) Anything herein to the contrary notwithstanding, the obligations
of the Company to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in such event
the Company shall pay such Bank interest at the highest rate permitted by
applicable law.
2.9 Swingline Loans.
---------------
(a) Subject to the terms and conditions hereof, the Swingline Bank
severally agrees to make a portion of the Aggregate W/C Revolving Commitments
available to the Company by making swingline loans (individually, a "Swingline
---------
Loan"; collectively, the "Swingline Loans") to the Company on any Business Day
---- ---------------
during the period from the Closing Date to the Revolving Termination Date in
accordance with the procedures set forth in this Section in an aggregate
principal amount at any one time outstanding not to exceed $10,000,000,
notwithstanding the fact that such Swingline Loans, when aggregated with the
Swingline Bank's outstanding W/C Revolving Loans, may exceed the Swingline
Bank's W/C Revolving Commitment (the amount of such commitment of the Swingline
Bank to make Swingline Loans to the Company pursuant to this subsection 2.9(a),
as the same may be reduced as a result of any assignment pursuant to Section
11.8, the Swingline Bank's "Swingline Commitment"); provided, that at no time
-------------------- -------- ----
shall (i) the sum of the Effective Amount of all Swingline Loans, L/C
Obligations, and W/C Revolving Loans exceed the Aggregate W/C Revolving
Commitments, or (ii) the Effective Amount of all Swingline Loans exceed the
Swingline Commitment. Additionally, no more than three (3) Swingline Loans may
be outstanding at any one time, and except as otherwise provided in subsection
2.8(c), all Swingline Loans shall at all times bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin, unless otherwise agreed to by
----
the Swingline Bank in its sole
37
discretion. Within the foregoing limits, and subject to the other terms and
conditions hereof, the Company may borrow under this subsection 2.9(a), prepay
pursuant to subsection 2.5 and reborrow pursuant to this subsection 2.9(a).
(b) The Company shall provide the Agent (with a copy to the Swingline
Bank) irrevocable written notice in the form of a Notice of Borrowing of any
Swingline Loan requested hereunder (which notice must be received by the
Swingline Bank and the Agent prior to 12:00 noon (San Francisco time) on the
requested Borrowing date) specifying (i) the amount to be borrowed, and (ii) the
requested Borrowing date, which must be a Business Day.
Upon receipt of the Notice of Borrowing, the Swingline Bank will
immediately confirm with the Agent (by telephone or in writing) that the Agent
has received a copy of the Notice of Borrowing from the Company and, if not, the
Swingline Bank will provide the Agent with a copy thereof. Unless the Swingline
Bank has received notice prior to 12:00 Noon (San Francisco time) on such
Borrowing date from the Agent (A) directing the Swingline Bank not to make the
requested Swingline Loan as a result of the limitations set forth in the proviso
-------
set forth in the first sentence of subsection 2.9(a); or (B) that one or more
conditions specified in Article V are not then satisfied; then, subject to the
terms and conditions hereof, the Swingline Bank will, not later than 2:00 p.m.
(San Francisco time) on the Borrowing date specified in such Notice, make the
amount of its Swingline Loan available to the Agent for the account of the
Company at the Agent's Payment Office in funds immediately available to the
Agent. The proceeds of such Swingline Loan will then promptly be made available
to the Company by the Agent crediting the account of the Company on the books of
BofA with the aggregate of the amounts made available to the Agent by the
Swingline Bank and in like funds as received by the Agent. Each Borrowing
pursuant to this Section shall be in an aggregate principal amount equal to two
hundred fifty thousand dollars ($250,000) or an integral multiple of one hundred
thousand dollars ($100,000) in excess thereof, unless otherwise agreed by the
Swingline Bank.
(c) If (i) any Swingline Loans shall remain outstanding at 9:00
a.m. (San Francisco time) on the Business Day immediately prior to a Swingline
Clean-Up Day and by such time on such Business Day the Agent shall have received
neither (A) a Notice of Borrowing delivered pursuant to Section 2.3 requesting
that W/C Revolving Loans be made pursuant to Section 2.1 on the Swingline Clean-
Up Day in an amount at least equal to the aggregate principal amount of such
Swingline Loans, nor (B) any other notice indicating the Company's intent to
repay such Swingline Loans with funds obtained from other sources, or (ii) any
Swingline Loans shall remain outstanding during the existence of a Default or
Event of Default and the Swingline Bank shall in its sole discretion notify the
Agent that the Swingline Bank desires that such Swingline Loans be converted
into W/C Revolving Loans, then the Agent shall be deemed to have received a
Notice of Borrowing from the Company pursuant to Section 2.3 requesting that
Base Rate W/C Revolving Loans be made pursuant to Section 2.1 on such Swingline
Clean-Up Day (in the case of the circumstances described in clause (i) above) or
on the first Business Day after the date of such notice from the Swingline Bank
(in the case of the circumstances described in clause (ii) above) in an amount
equal to the aggregate amount
38
of such Swingline Loans, and the procedures set forth in subsections 2.3(b) and
2.3(c) shall be followed in making such Base Rate Loans; provided, that such
-------- ----
Base Rate W/C Revolving Loans shall be made notwithstanding the Company's
failure to comply with subsections 5.3(b) and 5.3(c); and provided, further,
-------- -------
that if a Borrowing of Base Rate W/C Revolving Loans becomes legally
impracticable and if so required by the Swingline Bank at the time such Base
Rate W/C Revolving Loans are required to be made by the Banks in accordance with
this subsection 2.9(c), each Bank agrees that in lieu of making Base Rate W/C
Revolving Loans as described in this subsection 2.9(c), such Bank shall purchase
a participation from the Swingline Bank in the applicable Swingline Loans in an
amount equal to such Bank's Pro Rata Share of such Swingline Loans, and the
procedures set forth in subsections 2.3(b) and 2.3(c) shall be followed in
connection with the purchases of such participations. The proceeds of such Base
Rate W/C Revolving Loans, or participations purchased, shall be applied to repay
such Swingline Loans. A copy of each notice given by the Agent to the Banks
pursuant to this subsection 2.9(c) with respect to the making of Loans, or the
purchases of participations, shall be promptly delivered by the Agent to the
Company. Each Bank's obligation in accordance with this Agreement to make the
W/C Revolving Loans, or purchase the participations, as contemplated by this
subsection 2.9(c), shall be absolute and unconditional and shall not be affected
by any circumstance, including (A) any set-off, counterclaim, recoupment,
defense or other right which such Bank may have against the Swingline Bank, the
Company or any other Person for any reason whatsoever; (B) the occurrence or
continuance of a Default, an Event of Default or a Material Adverse Change; or
(C) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
2.10 Fees.
----
(a) Arrangement, Agency Fees.
------------------------
The Company shall pay an arrangement fee to the Arranger for the
Arranger's own account, and shall pay an agency fee to the Agent for the Agent's
own account, as required by the letter agreement ("Fee Letter") between the
----------
Company and the Arranger and the Agent dated October 23, 1997.
(b) Commitment Fees.
---------------
The Company shall pay to the Agent for the account of each Bank a
commitment fee on the average daily unused portion of such Bank's W/C Revolving
Commitment and Acquisition Revolving Commitment, computed on a quarterly basis
in arrears on the last Business Day of each calendar quarter based upon the
average daily utilization for that quarter as calculated by the Agent, equal to
the Applicable Margin. Such commitment fee shall accrue in the case of the W/C
Revolving Commitment and the Acquisition Revolving Commitment, from the Closing
Date to the Revolving Termination Date and shall be due and payable quarterly in
arrears on the last Business Day of each calendar quarter commencing on December
31, 1997 through the Revolving Termination Date, with the final payment to be
made on the Revolving Termination Date. The commitment fees provided in this
subsection shall accrue at all times after the above-
39
mentioned commencement date, including at any time during which one or more
conditions in Article V are not met.
2.11 Computation of Fees and Interest.
--------------------------------
(a) All computations of interest for Base Rate Loans when the Base
Rate is determined by BofA's "reference rate" shall be made on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed. All other
computations of fees and interest shall be made on the basis of a 360-day year
and actual days elapsed (which results in more interest being paid than if
computed on the basis of a 365-day year). Interest and fees shall accrue during
each period during which interest or such fees are computed from the first day
thereof to the last day thereof.
(b) Each determination of an interest rate by the Agent shall be
conclusive and binding on the Company and the Banks in the absence of manifest
error. The Agent will, at the request of the Company or any Bank, deliver to the
Company or the Bank, as the case may be, a statement showing the quotations used
by the Agent in determining any interest rate and the resulting interest rate.
2.12 Payments by the Company.
-----------------------
(a) All payments to be made by the Company shall be made without set-
off, recoupment or counterclaim. Except in the case of Swingline Loans and as
otherwise expressly provided herein, all payments by the Company shall be made
to the Agent for the account of the Banks at the Agent's Payment Office, and
shall be made in dollars and in immediately available funds, no later than 11:00
a.m. (San Francisco time) on the date specified herein. The Agent will promptly
distribute to each Bank its Pro Rata Share (or other applicable share as
expressly provided herein) of such payment in like funds as received. Any
payment received by the Agent later than 11:00 a.m. (San Francisco time) shall
be deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from the Company prior to the
date on which any payment is due to the Banks that the Company will not make
such payment in full as and when required, the Agent may assume that the Company
has made such payment in full to the Agent on such date in immediately available
funds and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Company has not made such
payment in full to the Agent, each Bank shall repay to the Agent on demand such
amount distributed to such Bank, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such Bank
until the date repaid.
40
2.13 Payments by the Banks to the Agent.
----------------------------------
(a) Unless the Agent receives notice from a Bank on or prior to the
Closing Date or, with respect to any Borrowing after the Closing Date, at least
one Business Day prior to the date of such Borrowing, that such Bank will not
make available as and when required hereunder to the Agent for the account of
the Company the amount of that Bank's Pro Rata Share of the Borrowing, the Agent
may assume that each Bank has made such amount available to the Agent in
immediately available funds on the Borrowing Date and the Agent may (but shall
not be so required), in reliance upon such assumption, make available to the
Company on such date a corresponding amount. If and to the extent any Bank shall
not have made its full amount available to the Agent in immediately available
funds and the Agent in such circumstances has made available to the Company such
amount, that Bank shall on the Business Day following such Borrowing Date make
such amount available to the Agent, together with interest at the Federal Funds
Rate for each day during such period. A notice of the Agent submitted to any
Bank with respect to amounts owing under this subsection (a) shall be
conclusive, absent manifest error. If such amount is so made available, such
payment to the Agent shall constitute such Bank's Loan on the date of Borrowing
for all purposes of this Agreement. If such amount is not made available to the
Agent on the Business Day following the Borrowing Date, the Agent will notify
the Company of such failure to fund and, upon demand by the Agent, the Company
shall pay such amount to the Agent for the Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the Loans
comprising such Borrowing (but without payment of the amounts that would have
been owing under Section 4.4 on account of such prepayment had such Loan been
made by the defaulting Bank as an Offshore Rate Loan).
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.14 Sharing of Payments, Etc.
------------------------
If, other than as expressly provided elsewhere herein, any Bank shall
obtain on account of the Obligations in its favor any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its ratable share (or other share contemplated
hereunder), such Bank shall immediately (a) notify the Agent of such fact, and
(b) purchase from the other Banks such participations in the Loans made by them
as shall be necessary to cause such purchasing Bank to share the excess payment
pro rata with each of them; provided, however, that if all or any portion of
-------- -------
such excess payment is thereafter recovered from the purchasing Bank, such
purchase shall to that extent be rescinded and each other Bank shall repay to
the purchasing Bank the purchase price paid therefor, together with an amount
equal to such paying Bank's ratable share (according to the proportion of (i)
the amount of such paying Bank's required repayment to (ii) the total amount so
recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so
41
recovered. The Company agrees that any Bank so purchasing a participation from
another Bank may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off, but subject to Section 11.10)
with respect to such participation as fully as if such Bank were the direct
creditor of the Company in the amount of such participation. The Agent will keep
records (which shall be conclusive and binding in the absence of manifest error)
of participations purchased under this Section 2.14 and will in each case notify
the Banks following any such purchases or repayments.
2.15 Voluntary Termination of Commitments.
------------------------------------
The Company may, upon not less than three Business Days' prior notice to
the Agent, terminate the W/C Revolving Commitment or the Acquisition Revolving
Commitment in full but not in part as long as such termination is accompanied by
the simultaneous prepayment in full of all outstanding W/C Revolving Loans and
Acquisition Revolving Loans, respectively, and the termination, or Cash
Collateralization, of all outstanding L/C Obligations. Once terminated in
accordance with this Section, the W/C Revolving Commitment and the Acquisition
Revolving Commitment may not be reinstated. All accrued commitment fees to, but
not including the effective date of such termination, shall be paid on the
effective date of such termination.
ARTICLE III
THE LETTERS OF CREDIT
---------------------
3.1 The Letter of Credit Facility.
-----------------------------
(a) On the terms and conditions set forth herein, (i) the Issuing Bank
agrees, (A) from time to time on any Business Day during the period from the
Closing Date until 30 days before the Revolving Termination Date to issue
Letters of Credit for the account of the Company, and to amend or renew Letters
of Credit previously issued by it, in accordance with subsections 3.2(c) and
3.2(d), and (B) to honor drafts under the Letters of Credit; and (ii) the Banks
severally agree to participate in Letters of Credit Issued for the account of
the Company; provided, that the Issuing Bank shall not be obligated to Issue,
--------
and no Bank shall be obligated to participate in, any Letter of Credit if, as of
the date of Issuance of such Letter of Credit (the "Issuance Date"), (A) the
-------------
Effective Amount of all L/C Obligations, W/C Revolving Loans, and Swingline
Loans exceeds the aggregate W/C Revolving Commitments, (B) the participation of
any Bank in the Effective Amount of all L/C Obligations plus the Effective
----
Amount of the W/C Revolving Loans of such Bank plus the participation of such
----
Bank, if any, in the Effective Amount of all Swingline Loans exceeds such Bank's
W/C Revolving Commitment, or (C) the Effective Amount of L/C Obligations exceeds
the L/C Commitment. Within the foregoing limits, and subject to the other terms
and conditions hereof, the Company's ability to obtain Letters of Credit shall
be fully revolving, and, accordingly, the Company may, during the foregoing
period, obtain Letters of Credit to
42
replace Letters of Credit which have expired or which have been drawn upon and
reimbursed .
(b) The Issuing Bank is under no obligation to Issue any Letter of Credit
if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain the
Issuing Bank from Issuing such Letter of Credit, or any Requirement of Law
applicable to such Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over
such Issuing Bank shall prohibit, or request that such Issuing Bank refrain
from, the Issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon such Issuing Bank with respect to such Letter of
Credit any restriction, reserve or capital requirement (for which such Issuing
Bank is not otherwise compensated hereunder), or shall impose upon such Issuing
Bank any unreimbursed loss, cost or expense;
(ii) the Issuing Bank has received written notice from any
Bank, the Agent or the Company, on or prior to the Business Day prior to the
requested date of Issuance of such Letter of Credit, that one or more of the
applicable conditions contained in Article V is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is (A)
more than one calendar year after the date of Issuance, unless the Majority
Banks have approved such expiry date in writing, or (B) less than 30 days prior
to the Revolving Termination Date, unless all of the Banks have approved such
expiry date in writing;
(iv) the expiry date of any requested Letter of Credit is prior
to the maturity date of any financial obligation to be supported by the
requested Letter of Credit, unless such Letter of Credit is issued in connection
with worker's compensation or to secure self-insurance deductibles or
environmental clean-up obligations;
(v) any requested Letter of Credit does not provide for
drafts, or is not otherwise in form and substance reasonably acceptable to such
Issuing Bank, or the Issuance of a Letter of Credit may violate any policies of
the Issuing Bank;
(vi) any standby Letter of Credit is for the purpose of
supporting the issuance of any letter of credit by any other Person;
(vii) such Letter of Credit is in a face amount less than
$100,000 or to be denominated in a currency other than Dollars; or
(viii) the requested Letter of Credit provides for payment
thereunder sooner than the Business Day following the presentation to such
Issuing Bank of the documentation required thereunder.
43
3.2 Issuance, Amendment and Renewal of Letters of Credit.
----------------------------------------------------
(a) Each Letter of Credit shall be issued upon the irrevocable written
request of the Company received by the Issuing Bank (with a copy sent by the
Company to the Agent) at least five days (or such shorter time as such Issuing
Bank may agree in a particular instance in its sole discretion) prior to the
proposed date of issuance. Each such request for issuance of a Letter of Credit
shall be made by an original writing or by facsimile, confirmed immediately in
an original writing, in the form of an L/C Application, and shall specify in
form and detail satisfactory to such Issuing Bank:
(i) the proposed date of issuance of the Letter of Credit
(which shall be a Business Day);
(ii) the face amount of the Letter of Credit;
(iii) the expiry date of the Letter of Credit;
(iv) the name and address of the beneficiary thereof;
(v) the documents to be presented by the beneficiary of the
Letter of Credit in case of any drawing thereunder;
(vi) the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder; and
(vii) such other usual and customary matters as the Issuing Bank
may require.
(b) At least three Business Days prior to the Issuance of any Letter of
Credit or any amendment or renewal of a Letter of Credit, the Issuing Bank will
confirm with the Agent (by telephone or in writing) that the Agent has received
a copy of the L/C Application or L/C Amendment Application from the Company and,
if not, such Issuing Bank will provide the Agent with a copy thereof. Unless the
Issuing Bank has received notice on or before the Business Day immediately
preceding the date such Issuing Bank is to issue, amend or renew a requested
Letter of Credit from the Agent, the Company, or the Majority Banks (i)
directing such Issuing Bank not to issue, amend or renew such Letter of Credit
because such issuance, amendment or renewal is not then permitted under
subsection 3.1(a) as a result of the limitations set forth in clauses (A)
through (C) thereof or subsection 3.1(b)(ii); or (ii) that one or more
conditions specified in Article V are not then satisfied; then, subject to the
terms and conditions hereof, such Issuing Bank shall, on the requested date,
issue a Letter of Credit for the account of the Company or amend or renew a
Letter of Credit, as the case may be, in accordance with such Issuing Bank's
usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding and prior
to the Revolving Termination Date, the Issuing Bank will, upon the written
request of the Company received by such Issuing Bank (with a copy sent by the
Company to the Agent) at least five days (or such shorter time as such Issuing
Bank may agree in a particular
44
instance in its sole discretion) prior to the proposed date of amendment, amend
any Letter of Credit issued by it. Each such request for amendment of a Letter
of Credit shall be made by an original writing or by facsimile, confirmed
immediately in an original writing, made in the form of an L/C Amendment
Application and shall specify in form and detail satisfactory to such Issuing
Bank:
(i) the Letter of Credit to be amended;
(ii) the proposed date of amendment of the Letter of Credit
(which shall be a Business Day);
(iii) the nature of the proposed amendment; and
(iv) such other usual and customary matters as such Issuing
Bank may require.
Such Issuing Bank shall be under no obligation to amend any Letter of Credit if:
(A) such Issuing Bank would have no obligation at such time to issue such Letter
of Credit in its amended form under the terms of this Agreement; or (B) the
beneficiary of any such letter of Credit does not accept the proposed amendment
to the Letter of Credit. The Agent will promptly notify the Banks of the
receipt by it of any L/C Application or L/C Amendment Application.
(d) The Issuing Bank and the Banks agree that, while a Letter of Credit
is outstanding and prior to the Revolving Termination Date, at the option of the
Company and upon the written request of the Company received by the Issuing Bank
(with a copy sent by the Company to the Agent) at least five days (or such
shorter time as such Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of notification of renewal, such Issuing
Bank shall be entitled to authorize the automatic renewal of any Letter of
Credit issued by it. Each such request for renewal of a Letter of Credit shall
be made by an original writing or by facsimile, confirmed immediately in an
original writing, in the form of an L/C Amendment Application, and shall specify
in form and detail satisfactory to such Issuing Bank:
(i) the Letter of Credit to be renewed;
(ii) the proposed date of notification of renewal of the Letter
of Credit (which shall be a Business Day);
(iii) the revised expiry date of the Letter of Credit; and
(iv) such other usual and customary matters as the Issuing Bank
may require.
The Issuing Bank shall be under no obligation so to renew any Letter of Credit
if: (A) such Issuing Bank would have no obligation at such time to issue or
amend such Letter of Credit in its renewed form under the terms of this
Agreement; or (B) the beneficiary of any such Letter of Credit does not accept
the proposed renewal of the
45
Letter of Credit. If any outstanding Letter of Credit shall provide that it
shall be automatically renewed unless the beneficiary thereof receives notice
from such Issuing Bank that such Letter of Credit shall not be renewed, and if
at the time of renewal such Issuing Bank would be entitled to authorize the
automatic renewal of such Letter of Credit in accordance with this subsection
3.2(d) upon the request of the Company but the Issuing Bank shall not have
received any L/C Amendment Application from the Company with respect to such
renewal or other written direction by the Company with respect thereto, the
Issuing Bank shall nonetheless be permitted to allow such Letter of Credit to
renew, and the Company and the Banks hereby authorize such renewal, and,
accordingly, the Issuing Bank shall be deemed to have received an L/C Amendment
Application from the Company requesting such renewal.
(e) In connection with Letters of Credit that automatically renew or
extend their expiry date, the Issuing Bank may, at its election (or as required
by the Agent at the direction of the Majority Banks), deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than 30 days before the Revolving Termination
Date.
(f) This Agreement shall control in the event of any conflict or
inconsistency with any L/C-Related Document.
(g) The Issuing Bank will also deliver to the Agent, concurrently or
promptly following its delivery of a Letter of Credit, or amendment to or
renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and
complete copy of each such Letter of Credit or amendment to or renewal of a
Letter of Credit.
(h) The Issuing Bank shall deliver to the Agent such reports with respect
to the Letters of Credit as the Agent may reasonably request from time to time.
3.3 Risk Participations, Drawings and Reimbursements.
------------------------------------------------
(a) Immediately upon the Issuance of each Letter of Credit, each
Bank shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Issuing Bank a participation in such Letter of Credit and each
drawing thereunder in an amount equal to the product of (i) the Pro Rata Share
of such Bank, times (ii) the maximum amount available to be drawn under such
Letter of Credit and the amount of such drawing, respectively. For purposes of
Section 2.1, each Issuance of a Letter of Credit shall be deemed to utilize the
W/C Revolving Commitment of each Bank by an amount equal to the amount of such
participation.
(b) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Issuing Bank will promptly
notify the Company. The Company shall reimburse the Issuing Bank, directly or
with the proceeds of a Loan, prior to 10:00 a.m. (San Francisco time), on each
date that any amount is paid by such Issuing Bank under any Letter of Credit
(each such date, an "Honor Date"), in an
----------
46
amount equal to the amount so paid by such Issuing Bank. If the Company fails to
reimburse the Issuing Bank for the full amount of any drawing under any Letter
of Credit by 10:00 a.m. (San Francisco time) on the Honor Date, the Issuing Bank
will promptly notify the Agent and the Agent will promptly notify each Bank
thereof, and the Company shall be deemed to have requested that Base Rate W/C
Revolving Loans be made by the Banks to be disbursed on the Honor Date under
such Letter of Credit, subject to the amount of the unutilized portion of the
Aggregate W/C Revolving Commitment and subject to the conditions set forth in
Section 5.3. Any notice given by such Issuing Bank or the Agent pursuant to this
subsection 3.3(b) may be oral if immediately confirmed in writing (including by
facsimile); provided that the lack of such an immediate confirmation shall not
-------- ----
affect the conclusiveness or binding effect of such notice.
(c) Each Bank shall upon any notice pursuant to subsection 3.3(b)
make available to the Agent for the account of the relevant Issuing Bank an
amount in Dollars and in immediately available funds equal to its Pro Rata Share
of the amount of the drawing, whereupon the participating Banks shall (subject
to subsection 3.3(d)) each be deemed to have made a Loan consisting of a Base
Rate W/C Revolving Loan to the Company in that amount. If any Bank so notified
fails to make available to the Agent for the account of such Issuing Bank the
amount of such Bank's Pro Rata Share of the amount of the drawing by no later
than 12:00 noon (San Francisco time) on the Honor Date, then interest shall
accrue on such Bank's obligation to make such payment, from the Honor Date to
the date such Bank makes such payment, at a rate per annum equal to the Federal
Funds Rate in effect from time to time during such period. The Agent will
promptly give notice of the occurrence of the Honor Date, but failure of the
Agent to give any such notice on the Honor Date or in sufficient time to enable
any Bank to effect such payment on such date shall not relieve such Bank from
its obligations under this Section 3.3.
(d) With respect to any unreimbursed drawing that is not converted
into Base Rate W/C Revolving Loans to the Company in whole or in part, because
of the Company's failure to satisfy the conditions set forth in Section 5.3 or
for any other reason, the Company shall be deemed to have incurred from the
relevant Issuing Bank an L/C Borrowing in the amount of such drawing, which L/C
Borrowing shall be due and payable on demand (together with interest) and shall
bear interest at a rate per annum equal to the Base Rate plus 2% per annum, and
----
each Bank's payment to such Issuing Bank pursuant to subsection 3.3(c) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Bank in satisfaction of its participation
obligation under this Section 3.3.
(e) Each Bank's obligation in accordance with this Agreement to make
the Loans or L/C Advances, as contemplated by this Section 3.3, as a result of a
drawing under a Letter of Credit, shall be absolute and unconditional and
without recourse to the Issuing Bank and shall not be affected by any
circumstance, including (i) any set-off, counterclaim, recoupment, defense or
other right which such Bank may have against such Issuing Bank, the Company or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default, an Event of Default or a Material Adverse Change; or (iii) any
other circumstance, happening or event
47
whatsoever, whether or not similar to any of the foregoing; provided, however,
-------- -------
that each Bank's obligation to make W/C Revolving Loans under this Section 3.3
is subject to the conditions set forth in Section 5.3.
3.4 Repayment of Participations.
---------------------------
(a) Upon (and only upon) receipt by the Agent for the account of the
Issuing Bank of immediately available funds from the Company (i) in
reimbursement of any payment made by the Issuing Bank under a Letter of Credit
with respect to which any Bank has paid the Agent for the account of the Issuing
Bank for such Bank's participation in the Letter of Credit pursuant to Section
3.3 or (ii) in payment of interest thereon, the Agent will pay to each Bank, in
the same funds as those received by the Agent for the account of the Issuing
Bank, the amount of such Bank's Pro Rata Share of such funds, and the Issuing
Bank shall receive the amount of the Pro Rata Share of such funds of any Bank
that did not so pay the Agent for the account of the Issuing Bank.
(b) If the Agent or the Issuing Bank is required at any time to
return to the Company, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by the
Company to the Agent for the account of such Issuing Bank pursuant to subsection
3.4(a) in reimbursement of a payment made under the Letter of Credit or interest
or fee thereon, each Bank shall, on demand of the Agent, forthwith return to the
Agent or such Issuing Bank the amount of its Pro Rata Share of any amounts so
returned by the Agent or such Issuing Bank plus interest thereon from the date
such demand is made to the date such amounts are returned by such Bank to the
Agent or the Issuing Bank, at a rate per annum equal to the Federal Funds Rate
in effect from time to time.
3.5 Role of the Issuing Bank.
------------------------
(a) Each Bank and the Company agree that, in paying any drawing under
a Letter of Credit, the Issuing Bank shall not have any responsibility to obtain
any document (other than any sight draft and certificates expressly required by
the Letter of Credit) or to ascertain or inquire as to the validity or accuracy
of any such document or the authority of the Person executing or delivering any
such document.
(b) No Agent-Related Person nor any correspondents, participant or
assignee of the Issuing Bank shall be liable to any Bank for: (i) any action
taken or omitted in connection herewith at the request or with the approval of
the Banks (including the Majority Banks, as applicable); (ii) any action taken
or omitted in the absence of gross negligence or willful misconduct; or (iii)
the due execution, effectiveness, validity or enforceability of any L/C-Related
Document.
(c) The Company hereby assumes all risks of the acts or omissions of
any beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
-------- -------
preclude the Company's pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. No Agent-
Related Person nor any of the
48
correspondents, participants or assignees of the Issuing Bank shall be liable or
responsible for any of the matters described in clauses (a) through (g) of
Section 3.6; provided, however, notwithstanding anything in such clauses, that
-------- -------
the Company may have a claim against the Issuing Bank, and the Issuing Bank may
be liable to the Company, to the extent, but only to the extent, of any direct,
as opposed to consequential or exemplary, damages suffered by the Company which
the Company proves were caused by the Issuing Bank's willful misconduct or gross
negligence or the Issuing Bank's willful or grossly negligent failure to pay
under any Letter of Credit after the presentation to it by the beneficiary of a
sight draft and certificate(s) strictly complying with the terms and conditions
of a Letter of Credit. In furtherance and not in limitation of the foregoing:
(i) each Issuing Bank may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary; and (ii) such Issuing Bank shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.
3.6 Obligations Absolute.
--------------------
The obligations of the Company under this Agreement and any L/C-Related
Document to reimburse the Issuing Bank for a drawing under a Letter of Credit,
and to repay any L/C Borrowing and any drawing under a Letter of Credit
converted into Loans shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement and each such other L/C-
Related Document under all circumstances, including the following:
(a) any lack of validity or enforceability of this Agreement or any L/C-
Related Document;
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the obligations of the Company in respect of any Letter
of Credit or any other amendment or waiver of or any consent to departure from
all or any of the L/C-Related Documents;
(c) the existence of any claim, set-off, defense or other right that the
Company may have at any time against any beneficiary or any transferee of any
Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the Issuing Bank or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by the
L/C-Related Documents or any unrelated transaction;
(d) any draft, demand, certificate or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under any Letter of Credit;
49
(e) any payment by the Issuing Bank under any Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of any Letter of Credit; or any payment made by the Issuing Bank under any
Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-
in-possession, assignee for the benefit of creditors, liquidator, receiver or
other representative of or successor to any beneficiary or any transferee of any
Letter of Credit, including any arising in connection with any Insolvency
Proceeding;
(f) any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the obligations of the Company in respect of any
Letter of Credit; or
(g) any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Company or a
guarantor.
3.7 Cash Collateral Pledge.
----------------------
Upon the request of the Agent, if (a) the Issuing Bank has honored any full
or partial drawing request on any Letter of Credit and such drawing has resulted
in an L/C Borrowing hereunder, or (b) if, as of the Revolving Termination Date,
any Letters of Credit may for any reason remain outstanding and partially or
wholly undrawn, then, the Company shall immediately Cash Collateralize the L/C
Obligations in an amount equal to the L/C Obligations. The Company hereby grants
to the Agent, for the benefit of the Agent, the Issuing Bank and the Banks, a
security interest in all such cash and deposit account balances used to Cash
Collateralize the Company's obligations hereunder.
3.8 Letter of Credit Fees.
---------------------
(a) The Company shall pay to the Agent for the account of each of the
Banks a letter of credit fee with respect to the Letters of Credit on the
average daily maximum amount available to be drawn of the outstanding Letters of
Credit, computed on a quarterly basis in arrears on the last Business Day of
each calendar quarter based upon Letters of Credit outstanding for that quarter
as calculated by the Agent, equal to the Letter of Credit Rate. Such letter of
credit fees shall be due and payable quarterly in arrears on the last Business
Day of each calendar quarter during which Letters of Credit are outstanding,
commencing on the first such quarterly date to occur after the Closing Date,
through the Revolving Termination Date (or such later date upon which the
outstanding Letters of Credit shall expire), with the final payment to be made
on the Revolving Termination Date (or such later expiration date).
(b) The Company shall pay to the Agent for the account of the Issuing
Bank a letter of credit fronting fee equal to 0.125% per annum of the average
daily maximum amount available to be drawn under outstanding Letters of Credit,
computed on a quarterly basis in arrears on the last Business Day of each
calendar quarter. Such fronting fees shall be due and payable quarterly in
arrears on the last Business Day of each calendar quarter during which Letters
of Credit are outstanding, commencing on the
50
first such quarterly date to occur after the Closing Date, through the Revolving
Termination Date (or such later date upon which the outstanding Letters of
Credit shall expire), with the final payment to be made on the Revolving
Termination Date (or such later expiration date).
(c) The Company shall pay to the Issuing Bank from time to time on
demand the normal issuance, presentation, amendment and other processing fees,
and other standard costs and charges, of the Issuing Bank relating to letters of
credit as from time to time in effect.
3.9 Uniform Customs and Practice.
----------------------------
The Uniform Customs and Practice for Documentary Credits as published by
the International Chamber of Commerce ("UCP") most recently at the time of
---
issuance of any Letter of Credit shall (unless otherwise expressly provided in
the Letters of Credit) apply to the Letters of Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
4.1 Taxes.
-----
(a) Subject to subsection 4.1(f), any and all payments by the Company
to each Bank or the Agent under this Agreement and any other Loan Document shall
be made free and clear of, and without deduction or withholding for, any Taxes.
In addition, the Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or withhold any
Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Bank or the Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this Section),
such Bank or the Agent, as the case may be, receives and retains an amount
equal to the sum it would have received and retained had no such deductions
or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
(iii) the Company shall pay the full amount deducted or withheld
to the relevant taxing authority or other authority in accordance with
applicable law; and
51
(iv) the Company shall also pay to each Bank or the Agent for
the account of such Bank, at the time interest is paid, Further Taxes in
the amount that the respective Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless each Bank and
the Agent for the full amount of (i) Taxes, (ii) Other Taxes, and (iii) Further
Taxes in the amount that the respective Bank specifies as necessary to preserve
the after-tax yield the Bank would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed, and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes, Other Taxes or Further Taxes were correctly
or legally asserted. Payment under this indemnification shall be made within 30
days after the date the Bank or the Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by the Company of
Taxes, Other Taxes or Further Taxes, the Company shall furnish to each Bank or
the Agent the original or a certified copy of a receipt evidencing payment
thereof, or other evidence of payment satisfactory to such Bank or the Agent.
(e) If the Company is required to pay any amount to any Bank or the
Agent pursuant to subsection (b) or (c) of this Section, then such Bank shall
use reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Company which may thereafter accrue, if such change in
the sole judgment of such Bank is not otherwise disadvantageous to such Bank.
(f) The Company will not be required to pay any additional amounts in
respect of Taxes constituting United States federal income tax to the Agent or
any Bank for the account of any Lending Office of such Bank: (i) if the
obligation to pay such additional amounts would not have arisen but for a
failure by such Bank to comply with its obligations under Section 12.10 in
respect of such Lending Office, or (ii) if such Bank shall have delivered to the
Company a Form 4224, Form 1001, or Form W-8 in respect of such Lending Office
pursuant to Section 12.10 and such Bank shall not at any time be entitled to
exemption from deduction or withholding of United States federal income tax in
respect of payments by the Company hereunder for the account of such Lending
Office for any reason other than a change in United States law or regulation or
in the official interpretation or administration thereof (whether or not having
the force of law) after the date of delivery of such form.
4.2 Illegality.
----------
(a) If any Bank determines that the introduction of any Requirement
of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for that Bank or its applicable
52
Lending Office to make Offshore Rate Loans, then, on notice thereof by the Bank
to the Company through the Agent, any obligation of that Bank to make Offshore
Rate Loans shall be suspended until the Bank notifies the Agent and the Company
that the circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any Offshore
Rate Loan, the Company shall, upon its receipt of notice of such fact and demand
from such Bank (with a copy to the Agent), prepay in full such Offshore Rate
Loans of that Bank then outstanding, together with interest accrued thereon and
amounts required under Section 4.4, either on the last day of the Interest
Period thereof, if the Bank may lawfully continue to maintain such Offshore Rate
Loans to such day, or immediately, if the Bank may not lawfully continue to
maintain such Offshore Rate Loan. If the Company is required to so prepay any
Offshore Rate Loan, then concurrently with such prepayment, the Company shall
borrow from the affected Bank, in the amount of such repayment, a Base Rate
Loan.
(c) If the obligation of any Bank to make or maintain Offshore Rate
Loans has been so terminated or suspended, the Company may elect, by giving
notice to the Bank through the Agent that all Loans which would otherwise be
made by that Bank as Offshore Rate Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Agent under this Section, the
affected Bank shall designate a different Lending Office with respect to its
Offshore Rate Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of that Bank, be
illegal or otherwise disadvantageous to that Bank.
4.3 Increased Costs and Reduction of Return.
---------------------------------------
(a) Without duplication of amounts that may be required to be paid
pursuant to subsection 4.3(b) but subject to Section 4.7, if any Bank determines
that, due to either (i) the introduction of or any change in or in the
interpretation of any law or regulation after the date hereof, or (ii) the
compliance by that Bank with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law)
promulgated or made after the date hereof, there shall be any increase in the
cost to such Bank of agreeing to make or making, funding or maintaining any
Offshore Rate Loans or issuing or maintaining any Letter of Credit or any
participating interest therein, then the Company shall be liable for, and shall
from time to time, upon demand (with a copy of such demand to be sent to the
Agent), pay to the Agent for the account of such Bank, additional amounts as are
sufficient to compensate such Bank for such increased costs.
(b) Subject to Section 4.7, if any Bank determines that (i) the
introduction of any Capital Adequacy Regulation after the date hereof, (ii) any
change in any Capital Adequacy Regulation, or (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof affects
53
or would affect the amount of capital required or expected to be maintained by
that Bank (or any Lending Office) or any corporation controlling such Bank and
(taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
W/C Revolving, Acquisition Revolving, L/C, or Swingline Commitments, loans,
credits or obligations under this Agreement, then, upon demand of such Bank to
the Company through the Agent, the Company shall pay to such Bank, from time to
time as specified by such Bank, additional amounts sufficient to compensate such
Bank for such increase.
4.4 Funding Losses.
--------------
Subject to Section 4.7, the Company shall reimburse each Bank and hold each
Bank harmless from any loss or expense which such Bank may sustain or incur as a
consequence of:
(a) the failure of the Company to make on a timely basis any payment
of principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or convert an
Offshore Rate Loan after the Company has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Conversion/ Continuation;
(c) the failure of the Company to make any prepayment of an Offshore
Rate Loan in accordance with any notice delivered under Section 2.5;
(d) the prepayment (including pursuant to Section 2.6) or other
payment (including after acceleration thereof) of an Offshore Rate Loan on a day
that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.4 of any Offshore Rate
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Company to the Banks under this Section and
under subsection 4.3(a), each Offshore Rate Loan made by a Bank (and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the LIBOR used in determining the Offshore Rate
for such Offshore Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded.
4.5 Inability to Determine Rates.
----------------------------
If the Agent or the Majority Banks determine that for any reason adequate
and reasonable means do not exist for determining the Offshore Rate for any
requested Interest Period with respect to a proposed Offshore Rate Loan or that
the Offshore Rate
54
applicable pursuant to subsection 2.8(a) for any requested Interest Period with
respect to a proposed Offshore Rate Loan does not adequately and fairly reflect
the cost to such Banks of funding such Loan, the Agent will promptly so notify
the Company and each Bank. Thereafter, the obligation of the Banks to make or
maintain Offshore Rate Loans, as the case may be, hereunder shall be suspended
until the Agent upon the instruction of the Majority Banks revokes such notice
in writing. Upon receipt of such notice, the Company may revoke any Notice of
Borrowing or Notice of Conversion/Continuation then submitted by it. If the
Company does not revoke such Notice, the Banks shall make, convert or continue
the Loans, as proposed by the Company, in the amount specified in the applicable
notice submitted by the Company, but such Loans shall be made, converted or
continued as Base Rate Loans instead of Offshore Rate Loans, as the case may be.
4.6 Reserves on Offshore Rate Loans.
-------------------------------
The Company shall pay to each Bank, as long as such Bank shall be required
under regulations of the FRB to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency funds or deposits (currently
known as "Eurocurrency liabilities"), additional costs on the unpaid principal
------------------------
amount of each Offshore Rate Loan equal to the actual costs of such reserves
allocated to such Loan by the Bank (as determined by the Bank in good faith,
which determination shall be conclusive) payable on each date on which interest
is payable on such Loan, provided the Company shall have received at least 15
days' prior written notice (with a copy to the Agent) of such additional
interest from the Bank. If a Bank fails to give notice 15 days prior to the
relevant Interest Payment Date, such additional interest shall be payable 15
days from receipt of such notice.
4.7 Certificates of Banks; Limitation on Demand.
-------------------------------------------
Any Bank claiming reimbursement or compensation under this Article IV shall
deliver to the Company (with a copy to the Agent) a certificate setting forth in
reasonable detail the amount payable to the Bank hereunder and such certificate
shall be conclusive and binding on the Company in the absence of manifest error.
No Bank shall be entitled to claim reimbursement or compensation pursuant to
Sections 4.3 or 4.4 for any period more than 180 days before the date such
certificate is so delivered.
4.8 Substitution of Banks.
---------------------
Upon the receipt by the Company from any Bank (an "Affected Bank") of a
-------------
claim for compensation under Section 4.1, 4.3, or 4.6 or an assertion of
illegality that is not applicable to all Banks pursuant to Section 4.2, the
Company may: (i) request the Affected Bank to use its best efforts to obtain a
replacement bank or financial institution (in each case, which shall be an
Eligible Assignee) satisfactory to the Company and to the Agent (a "Replacement
-----------
Bank") to acquire and assume all or a ratable part of all of such Affected
----
Bank's Loans, L/C Obligations, participations in Swingline Loans, and W/C
Revolving Commitment and Acquisition Revolving Commitment, as applicable, and if
such Affected Bank or any Affiliate thereof is a Swap Provider, all Swap
Contracts of
55
such Affected Bank and Affiliate; (ii) request one more of the other Banks to
acquire and assume all or part of such Affected Bank's Loans and Commitment; or
(iii) designate a Replacement Bank. Any such designation of a Replacement Bank
under clause (i) or (iii) shall be effected in accordance with the assignment
provisions contained in Section 11.8; provided, however, that the Company shall
-------- -------
be liable for any amounts arising pursuant to Section 4.4 as a result of the
substitution of any Bank(s) under this Section 4.8 on a date other than the last
day of an Interest Period with respect to outstanding Offshore Rate Loans.
4.9 Survival.
--------
The agreements and obligations of the Company in this Article IV shall
survive the payment of all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
--------------------
5.1 Conditions of Initial Loan.
--------------------------
The obligation of each Bank to make its initial Loan hereunder, is subject
to the condition that the Agent shall have received all of the following, in
form and substance satisfactory to the Agent and each Bank, and in sufficient
copies for each Bank:
(a) Credit Agreement.
----------------
This Agreement executed by each party thereto, and Notes (for those
Banks having requested them) executed by the Company;
(b) Authorization Documents.
-----------------------
For each of the Company and the Managing Member, a certificate
executed by the Secretary of such Person dated the Closing Date, certifying that
(i) such Person has the authority to execute, deliver and perform its
obligations under each of the Loan Documents or the Operating Agreement, as
applicable, (ii) attached behind Exhibit A to such certificate is a true,
---------
correct and complete copy of (A) the operating agreement of such Person then in
full force and effect, and (B) the certificate of formation such Person
certified by the Secretary of State of the State of Delaware as of a date not
more than ten (10) Business Days prior to the Closing Date, (iii) attached
behind Exhibit B to such certificate is a true, correct and complete copy of the
---------
resolutions adopted by the members such Person then in full force and effect
authorizing the execution, delivery and performance by such Person of each of
the Loan Documents, (iv) attached behind Exhibit C to such certificate is a
---------
true, correct and complete copy of such Person's membership list, (v) attached
behind Exhibit D to such certificate is a certificate of the Secretary of State
---------
of the state of Delaware and of each of the states set forth under such Person's
name in Schedule 5.1(b), in each case dated as of a date not more than fifteen
---------------
(15) Business Days prior to the Closing Date, stating that such Person is
56
in good standing in such states, (vi) the name(s) of the Person(s) authorized to
execute Loan Documents or the Operating Agreement, as applicable, on behalf of
such Person, together with a sample of the true signatures of such Person(s),
and (vii) the Banks and the Agent may conclusively rely on such certificate
unless and until such Person shall have delivered to the Agent a further
certificate canceling or amending such prior certificate;
(c) Legal Opinions.
--------------
An opinion of Xxxxxxx & Xxxxx L.L.P., special counsel to the Company,
addressed to the Agent and the Banks, substantially in the form of
Exhibit D;
---------
(d) Payment of Fees.
---------------
Evidence of payment by the Company of all accrued and unpaid fees,
costs and expenses to the extent due and payable pursuant to the terms of any
Loan Document on the Closing Date, together with Attorney Costs of BofA to the
extent invoiced prior to or on the Closing Date, plus such additional amounts of
----
Attorney Costs as shall constitute BofA's reasonable estimate of Attorney Costs
incurred or to be incurred by it through the closing proceedings (provided that
such estimate shall not thereafter preclude final settling of accounts between
the Company and BofA), including any such costs, fees and expenses arising under
or referenced in subsections 2.10(a) and 11.4(a).
(e) Certificates.
------------
Certificates signed by an authorized officer of the Managing Member on
behalf of the Company, dated as of the Closing Date, stating that:
(i) the representations and warranties contained in Article VI
are true and correct on and as of such date, as though made on and as of
such date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and
correct as of such earlier date);
(ii) no Default or Event of Default exists or would result from
the initial Borrowing; and
(iii) the Conveyance Agreements have been duly executed and
delivered by Old Services.
(f) Equity Offering.
---------------
The MLP shall have received gross issuance proceeds from the Equity
Offering in a minimum aggregate amount of $155,000,000, and the Net Issuance
Proceeds thereof shall have been contributed to the Company as equity;
57
(g) Debt Offering.
-------------
The Company shall have received gross issuance proceeds from the Debt
Offering in a minimum aggregate amount of $225,000,000;
(h) Repayment of Existing Debt.
--------------------------
All Obligations (as defined therein) under the Existing Credit
Agreement and all Obligations (as defined therein) under the Holdings Credit
Agreement shall have been repaid in full (or satisfactory arrangements for
simultaneous repayment in full shall have been made) and all commitments of the
lenders thereunder terminated;
(i) Compliance Certificate.
----------------------
A Compliance Certificate for the fiscal quarter ended on September 30,
1997 dated as of the last day of such fiscal quarter, duly executed by a
Responsible Officer, with appropriate insertions satisfactory to the Agent and
the Majority Banks in their sole discretion, together with the financial
statements for such fiscal quarter upon which such Compliance Certificate is
based, which Compliance Certificate will evidence computation of the relevant
financial ratios set forth in Sections 8.14, 8.15, and 8.16 even though the
covenants relating thereto are not applicable with respect to such fiscal
quarter; such Compliance Certificate need not evidence compliance with such
financial covenants;
(j) Quarterly Timber Report.
-----------------------
A Quarterly Timber Report for the fiscal quarter ended on September
30, 1997 complying with the requirements of subsection 7.2(e); and
(k) Other Documents.
---------------
Such other approvals, opinions, documents or materials as the Agent or
any Bank may reasonably request.
5.2 Conditions to Acquisition Revolving Loans.
-----------------------------------------
The obligation of each Bank to make Acquisition Revolving Loans hereunder
(other than the initial Acquisition Loans to be made on the Closing Date to
repay Indebtedness under the Existing Credit Agreement in an aggregate amount
not to exceed $26,000,000) is subject to the condition that the Agent has
received a certificate of a Responsible Officer, in form and substance
reasonably satisfactory to the Agent and the Majority Banks, with sufficient
copies for each Bank, confirming, together with supporting financial information
and with such level of detail as the Agent or the Majority Banks may reasonably
request, that, on a pro forma basis after giving effect to the Acquisition in
question, the Company would have been in compliance with the financial covenants
contained in Sections 8.14 through 8.18, inclusive, at the last day of the most
recently ended fiscal quarter of the Company for which financial statements have
been delivered hereunder giving pro forma effect on a consolidated basis to such
58
Acquisition and to the repayment or prepayment of any Indebtedness repaid or
prepaid in connection therewith and to the incurrence of any Indebtedness
arising therefrom (including the requested Acquisition Revolving Loans) in each
case on the first day of each relevant period for testing such compliance.
5.3 Conditions to All Borrowings and Issuances of Letters of Credit.
---------------------------------------------------------------
The obligation of each Bank, including the Swingline Bank and Issuing Bank,
to make any Loan to be made by it or to issue any Letter of Credit (including
its initial Loan or Letter of Credit) or to continue or convert any Loan as or
into an Offshore Rate Loan under Section 2.4 or to amend or extend any Letter of
Credit is subject to the satisfaction of the following conditions precedent on
the relevant Borrowing Date, Conversion/Continuation Date or date of Issuance or
amendment or extension, as applicable:
(a) Notice of Borrowing, Conversion/Continuation or Letter of Credit
----------------------------------------------------------------
Application.
-----------
The Agent shall have received (with, in the case of the initial Loan
only, a copy for each Bank) a Notice of Borrowing, Notice of
Conversion/Continuation, L/C Application, or L/C Amendment Application, as
applicable;
(b) Continuation of Representations and Warranties.
----------------------------------------------
The representations and warranties in Article VI shall be true and
correct on and as of such date with the same effect as if made on and as of such
date (except to the extent such representations and warranties expressly refer
to an earlier date, in which case they shall be true and correct as of such
earlier date); and
(c) No Existing Default.
-------------------
No Default or Event of Default shall exist or shall result from such
Borrowing, continuation, conversion, Issuance, or amendment or extension.
Each Notice of Borrowing, Notice of Conversion/Continuation, L/C Application,
and L/C Amendment Application submitted by the Company hereunder shall
constitute a representation and warranty by the Company hereunder, as of the
date of each such notice and as of each Borrowing Date, Conversion/Continuation
Date, or date of Issuance or amendment or extension, as applicable, that the
conditions in this Section 5.3 are satisfied.
59
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company, represents and warrants to the Agent and each Bank that:
6.1 Existence and Power. The Company, each of its Subsidiaries and each
-------------------
Related Entity:
(a) is a corporation, limited liability company or limited
partnership duly formed or organized, validly existing and in good standing
under the laws of the jurisdiction of its formation or organization, as the case
may be;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to (i) own its assets, carry on its
business and (ii) in the case of the Company, to execute, deliver, and perform
its obligations under the Loan Documents;
(c) is duly qualified as a foreign corporation, limited liability
company or limited partnership and is licensed and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification or license; and
(d) is in compliance with all Requirements of Law;
except, in each case referred to in clauses (b)(i), (c) or (d), to the extent
that the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
6.2 Corporate Authorization; No Contravention.
-----------------------------------------
The execution, delivery and performance by the Company of this Agreement
and each other Loan Document have been duly authorized by all necessary
corporate action, and do not and will not:
(a) contravene the terms of any of its Organization Documents;
(b) result in any breach or contravention of, or the creation of any
Lien under, any document evidencing any material Contractual Obligation to which
it is a party or any order, injunction, writ or decree of any Governmental
Authority to which it or its property is subject; or
(c) violate any Requirement of Law.
6.3 Governmental Authorization.
--------------------------
No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority is necessary or required
in connection with the execution, delivery or performance by, or enforcement
against, the Company of this
60
Agreement or any other Loan Document except (1) routine informational filings to
be made after the Closing Date that do not affect the enforceability of the Loan
Documents and (2) reconveyances and terminations of Liens securing the Existing
Credit Agreement.
6.4 Binding Effect.
--------------
This Agreement and each other Loan Document to which the Company is a party
constitute the legal, valid and binding obligations of the Company, enforceable
against it in accordance with their respective terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting the enforcement of creditors' rights generally or by general
equitable principles whether considered in a proceeding at law or in equity
(including principles of materiality, reasonableness, good faith, and fair
dealing).
6.5 Litigation.
----------
There are no actions, suits, proceedings, claims or disputes pending, or to
the best knowledge of the Company, threatened or contemplated, at law, in
equity, in arbitration or before any Governmental Authority, against the
Company, its Subsidiaries, the Related Entities or any of their respective
properties which:
(a) purport to affect or pertain to this Agreement or any other Loan
Document, the Debt Offering, the Equity Offering, or any of the transactions
contemplated hereby or thereby; or
(b) if determined adversely to the Company or its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect.
No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
6.6 No Default.
----------
No Default or Event of Default exists or would result from the incurring of
any Obligations by the Company. As of the Closing Date, neither the Company nor
any Subsidiary is in default under or with respect to any Contractual Obligation
in any respect which, individually or together with all such defaults, could
reasonably be expected to have a Material Adverse Effect, or that would, if such
default had occurred after the Closing Date, constitute an Event of Default
under subsection 9.1(e).
6.7 ERISA Compliance. Except as specifically disclosed in Schedule 6.7:
---------------- ------------
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable
61
determination letter from the IRS and to the best knowledge of the Company,
nothing has occurred which would cause the loss of such qualification. The
Company and each ERISA Affiliate has made all required contributions to any Plan
subject to Section 412 of the Code, and no application for a funding waiver or
an extension of any amortization period pursuant to Section 412 of the Code has
been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Company,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Company nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Company nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v)
neither the Company nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
6.8 Use of Proceeds; Margin Regulations.
-----------------------------------
The proceeds of the Loans are to be used solely for the purposes set forth
in and permitted by Section 7.12 and Section 8.7. Neither the Company nor any
Subsidiary is generally engaged in the business of purchasing or selling Margin
Stock or extending credit for the purpose of purchasing or carrying Margin
Stock.
6.9 Title to Properties.
-------------------
The Company and each Subsidiary have good record and marketable title in
fee simple to, or valid leasehold interests in, all real property necessary or
used in the ordinary conduct of their respective businesses, except for such
defects in title as could not, individually or in the aggregate, have a Material
Adverse Effect. As of the Closing Date, the property of the Company and its
Subsidiaries is subject to no Liens, other than Permitted Liens. The Conveyance
Agreements will be, as of the Closing Date, legally sufficient to transfer or
convey to the Company all properties not already held by it that are,
individually or in the aggregate, required to enable the Company to conduct its
operations as contemplated by the S-1.
6.10 Taxes.
-----
The Company and its Subsidiaries have filed (or have obtained extensions
with respect to) all Federal and other material tax returns and reports required
to be filed, and have paid all Federal and other material taxes, assessments,
fees and other governmental
62
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against the Company or
any Subsidiary that would, if made, have a Material Adverse Effect.
6.11 Financial Condition.
-------------------
(a) The audited combined balance sheets of the Company and Old
Services dated December 31, 1996 and unaudited combined balance sheets of the
Company and Old Services dated June 30, 1997 provided to the Agent and the
Banks, and the related consolidated statements of income or operations, members'
equity and cash flows for the fiscal year and two fiscal quarters, respectively,
ended on that date:
(i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise
expressly noted therein;
(ii) fairly present the financial condition of the Company
and Old Services as of the dates thereof and results of operations for the
period covered thereby; and
(iii) show all material indebtedness and other liabilities,
direct or contingent, of the Company and Old Services as of the dates
thereof, including liabilities for taxes, material commitments and
Contingent Obligations.
(b) The pro forma unaudited consolidated financial statements of the
Company dated June 30, 1997 provided to the Agent and the Banks, and the related
pro forma consolidated statements of income or operations, members' equity and
cash flows for the two fiscal quarters ended on that date, fairly present on a
pro forma basis the effect of the transfer of the assets of Old Services to the
Company at the beginning of such period upon the combined financial performance
of the Company and Old Services described in the financial statements referenced
in subsection 6.11(a) for the two fiscal quarters ending on that date. The
Company will, upon execution and delivery of the Conveyance Agreements on the
Closing Date, succeed in all material respects to the business, assets,
properties, liabilities and operations reflected by those pro forma financial
statements of the Company other than $1,000,000 in cash or cash equivalents
being retained in Old Services.
(c) All projections heretofore or hereafter furnished to the Agent
and the Banks for purposes of or in connection with this Agreement have been
prepared in good faith on the basis of the assumptions stated therein, which
assumptions are, in the opinion of the management of the Company, fair in the
light of conditions existing at the time of delivery of such projections; and at
the time of delivery, the management of the Company believed that the forecasts
of the Company's future financial performance set forth in the projections were
reasonable and attainable.
(d) Since June 30, 1997, there has been no Material Adverse Effect.
63
6.12 Environmental Matters.
---------------------
The Company conducts in the Ordinary Course of Business a review of the
effect of existing Environmental Laws and existing Environmental Claims on its
business, operations and properties, and as a result thereof the Company has
reasonably concluded that such Environmental Laws and Environmental Claims could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.13 Regulated Entities.
------------------
None of the Company, any Related Entity, any Person controlling the
Company, or any Subsidiary, is an "Investment Company" within the meaning of the
Investment Company Act of 1940. Neither the Company nor any Related Entity is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any state public utilities code
to which it is subject, or any other statute or regulation of the United States
or any such state limiting its ability to incur Indebtedness.
6.14 No Burdensome Restrictions.
--------------------------
Neither the Company nor any Subsidiary nor any Related Entity is a party to
or bound by any Contractual Obligation, or subject to any restriction in any
Organization Document, or any Requirement of Law, which could reasonably be
expected to have a Material Adverse Effect.
6.15 Copyrights, Patents, Trademarks and Licenses, etc.
-------------------------------------------------
The Company or its Subsidiaries own or are licensed or otherwise have the
right to use all of the patents, trademarks, service marks, trade names,
copyrights, contractual franchises, authorizations and other rights that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person. To the best knowledge of the
Company, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Company or any Subsidiary infringes upon any rights held by any
other Person. No claim or litigation regarding any of the foregoing is pending
or threatened, and no patent, invention, device, application, principle or any
statute, law, rule, regulation, standard or code is pending or, to the knowledge
of the Company, proposed, which, in either case, could reasonably be expected to
have a Material Adverse Effect.
6.16 Subsidiaries.
------------
As of the Closing Date, the Company has no Subsidiaries other than Finance
and has no equity investments in any other corporation or entity.
6.17 Insurance.
---------
The properties of the Company and its Subsidiaries are insured with
financially sound and reputable insurance companies not Affiliates of the
Company, in such
64
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the Company or such Subsidiary operates.
6.18 Swap Obligations.
----------------
Neither the Company nor any of its Subsidiaries has incurred any
outstanding obligations under any Swap Contracts, other than Permitted Swap
Obligations. The Company has undertaken its own independent assessment of its
consolidated assets, liabilities and commitments and has considered appropriate
means of mitigating and managing risks associated with such matters and has not
relied on any swap counterparty or any Affiliate of any swap counterparty in
determining whether to enter into any Swap Contract.
6.19 Full Disclosure.
---------------
None of the representations or warranties made by the Company in the Loan
Documents as of the date such representations and warranties are made or deemed
made, and none of the statements contained in any exhibit, written report,
statement or certificate furnished by or on behalf of the Company or any
Subsidiary in connection with the Loan Documents or the S-1 (including the
offering and disclosure materials delivered by or on behalf of the Company to
the Banks prior to the Closing Date), contains any untrue statement of a
material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or delivered.
ARTICLE VII
AFFIRMATIVE COVENANTS
---------------------
So long as any Bank shall have any W/C Revolving Commitment or Acquisition
Revolving Commitment hereunder, or the Swingline Bank shall have any Swingline
Commitment hereunder, or any Loan or other Obligation shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, unless the
Majority Banks waive compliance in writing:
7.1 Financial Statements.
--------------------
The Company shall deliver to the Agent, in form and detail satisfactory to
the Agent and the Majority Banks, with sufficient copies for each Bank:
(a) as soon as available, but not later than 90 days after the end of
each fiscal year (commencing with the fiscal year ended December 31, 1997), a
copy of the audited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year and the related consolidated statements
of income or operations, members' equity and cash flows for such year, setting
forth in each case in comparative form the
65
figures for the previous fiscal year, and accompanied by the opinion of Xxxxxx
Xxxxxxxx L.L.P. or another nationally-recognized independent public accounting
firm ("Independent Auditor"), which report shall state that such consolidated
-------------------
financial statement presents fairly the financial position of the Company and
its Subsidiaries for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years (except as otherwise stated therein). Such
opinion shall not be qualified or limited because of a restricted or limited
examination by the Independent Auditor of any material portion of the Company's
or any Subsidiary's records;
(b) as soon as available, but not later than 60 days after the end of
each of the first three fiscal quarters of each fiscal year (commencing with the
fiscal quarter ended March 31, 1998), a copy of the unaudited consolidated
balance sheet of the Company and its Subsidiaries as of the end of such quarter
and the related consolidated statements of income, members' equity and cash
flows for the period commencing on the first day and ending on the last day of
such quarter, and certified by a Responsible Officer as fairly presenting, in
accordance with GAAP (subject to the absence of footnotes and ordinary year-end
audit adjustments), the financial position and the results of operations of the
Company and its Subsidiaries.
7.2 Certificates; Other Information. The Company shall furnish to the Agent,
-------------------------------
with sufficient copies for each Bank:
(a) concurrently with each delivery of financial statements of the Company
pursuant to subsection 7.1(a), a certificate of the Independent Auditor (i)
stating that their audit examination has included a review of the terms of this
Agreement as it relates to accounting matters, (ii) stating whether, in
connection with their audit examination, any condition or event which
constitutes a Default or an Event of Default as they relate to accounting
matters has come to their attention, and if such a condition or event has come
to their attention, specifying the nature and period of existence thereof, and
(iii) stating that based on their audit examination nothing has come to their
attention which causes them to believe that the matters set forth in the
Compliance Certificate delivered therewith for the applicable fiscal year are
not stated in accordance with the terms of this Agreement; provided that such
-------- ----
accountants shall not be liable by reason of any failure to obtain knowledge of
any such Default or Event of Default that would not be disclosed in the course
of their audit examination;
(b) concurrently with the delivery of the financial statements referred to
in subsections 7.1(a) and (b), a Compliance Certificate executed by a
Responsible Officer, which Compliance Certificate for the fourth fiscal quarter
in each fiscal year shall also include a reconciliation of the Quarterly Timber
Reports for such fiscal year with the Annual Timber Report for such fiscal year;
(c) promptly, copies, within 15 days of the filing thereof, of all
financial statements and reports that the Company, its Subsidiaries or any
Related Entity sends to its shareholders, and copies of all financial statements
and regular, periodical or special reports (including Forms 10K, 10Q and 8K)
that the Company, its Subsidiaries or any Related Entity may make to, or file
with, the SEC;
66
(d) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary as the Agent, at
the request of any Bank, may from time to time reasonably request;
(e) as soon as practicable and in any event within sixty (60) days after
the end of each fiscal quarter, a certificate duly executed by a Responsible
Officer, certifying and setting forth a complete report of all Timber Harvest
for such fiscal quarter (the "Quarterly Timber Report"), including the
-----------------------
following:
(i) a summary of activity, including a breakdown of
harvesting under stumpage agreements and under other types of agreements, during
such fiscal quarter under (A) all outstanding timber cutting contracts or log
sale agreements or auctions or sales of logs conducted orally on the Timberlands
whereby the Company, as seller, is or may become obligated to cut, harvest or
otherwise remove Timber from the Timberlands and to sell or deliver such Timber
to third Persons, and (B) all stumpage and other Timber cutting contracts;
(ii) a summary of the total amount of Timber cut during such
fiscal quarter classified by species, total volumes removed and acreage disposed
of with such additional details as the Majority Banks may reasonably request;
(iii) an estimate of Timber growth during such fiscal
quarter, provided that, regardless of the actual amount of such estimate, the
addition to Merchantable Timber Inventory for any fiscal Quarter based upon such
estimate shall not exceed 1.25% of Merchantable Timber Inventory at the end of
the immediately preceding fiscal quarter;
(iv) all dispositions of Timberlands or other material
assets by the Company or any Subsidiary during such fiscal quarter;
(v) all proceeds received and revenues generated by such
cutting, harvesting, sale, exchange, or disposition during such fiscal quarter
and any other receipts from operation of the Timberlands such as wood use fees;
(vi) a summary of operating costs incurred in connection
with such cutting, harvesting, or removal during such fiscal quarter; and
(vii) a summary of the status of timber-harvesting and
similar permits applied for and received by the Company as of the end of such
fiscal quarter;
(f) as soon as practicable, and in any event within sixty (60) days after
the end of each fiscal year commencing with fiscal year 1998, a written
appraisal prepared by an independent timber appraiser of recognized standing
satisfactory to the Majority Banks and the Agent as to the volume and fair
market value of the Merchantable Timber standing on the Timberlands (an "Annual
------
Timber Report");
-------------
(g) no later than sixty (60) days after the end of each fiscal year
commencing with fiscal year 1998, a one (1) year and five (5) year harvesting
plan for the Timberlands for the next succeeding fiscal year and five (5) fiscal
years, showing, in each case for each
67
month during each such fiscal year, the total harvest volume by species, the
location of proposed cutting, the specifications and size of trees to be cut and
how such trees shall be designated, the time period in which harvesting is to
occur, logging methods to be used and the Planned Volume of annual harvests; and
(h) no later than sixty (60) days after the end of each fiscal year
commencing with fiscal year 1998, a one (1) year (prepared on a quarterly basis)
and five (5) year budget and business plan for the next fiscal year, each
including a pro forma balance sheet and statements of income and cash flows and
showing projected operating revenues, expenses and debt service of the Company
and its Subsidiaries and the volume of harvesting anticipated to be done under
stumpage agreements and under other types of agreements, and a certification by
a Responsible Officer that, based on such financial forecasts and the one year
harvesting plans being simultaneously furnished to the Agent and the Banks
pursuant to subsection 7.2(g), the Company will be able to comply with its
financial covenants set forth in Article VIII during the next fiscal year.
7.3 Notices. The Company shall promptly notify the Agent and each Bank:
-------
(a) upon a Responsible Officer obtaining knowledge thereof, of the
occurrence of any Default or Event of Default, or of the occurrence or existence
of any event or circumstance that foreseeably will become a Default or Event of
Default;
(b) upon a Responsible Officer obtaining knowledge thereof, of any matter
that has resulted or may result in a Material Adverse Effect, including (i)
breach or non-performance of, or any default under, a Contractual Obligation of
the Company or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding between the Company or any Subsidiary and any Governmental Authority
or the suspension of any permit issued by any Governmental Authority for the
benefit of the Company or any Subsidiary; or (iii) the commencement of, or any
material and adverse development in, any litigation or proceeding affecting the
Company or any Subsidiary; including pursuant to any applicable Environmental
Laws;
(c) of the occurrence of any of the following events affecting the Company
or any ERISA Affiliate (but in no event more than 10 days after such event), and
deliver to the Agent and each Bank a copy of any notice with respect to such
event that is filed with a Governmental Authority and any notice delivered by a
Governmental Authority to the Company or any ERISA Affiliate with respect to
such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability
of any Pension Plan;
(iii) the adoption of, or the commencement of contributions
to, any Plan subject to Section 412 of the Code by the Company or any ERISA
Affiliate; or
68
(vi) the adoption of any amendment to a Plan subject to
Section 412 of the Code, if such amendment results in a material increase in
contributions or Unfunded Pension Liability.
(d) of any material change in accounting policies or financial reporting
practices by the Company or any of its consolidated Subsidiaries; and
(e) upon the request from time to time of the Agent, the Swap Termination
Values, together with a description of the method by which such values were
determined, relating to any then-outstanding Swap Contracts to which the Company
or any of its Subsidiaries is party.
Each notice under subsections (a), (b), (c) or (d) of this Section shall be
accompanied by a written statement by a Responsible Officer setting forth
details of the occurrence referred to therein, and stating what action the
Company or any affected Subsidiary proposes to take with respect thereto and at
what time. Each notice under subsection 7.3(a) shall describe with
particularity any and all clauses or provisions of this Agreement or other Loan
Document that have been (or foreseeably will be) breached or violated.
7.4 Preservation of Existence, Etc. The Company shall, and shall cause each
------------------------------
Related Entity and each Subsidiary to:
(a) preserve and maintain in full force and effect its limited
liability company, limited partnership, or corporate existence and good standing
under the laws of its state or jurisdiction of formation or of incorporation;
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary
or desirable in the normal conduct of its business except in connection with
transactions permitted by Section 8.3 and sales of assets permitted by Section
8.2;
(c) use reasonable efforts, in the Ordinary Course of Business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
7.5 Maintenance of Property.
-----------------------
The Company shall maintain, and shall cause each Subsidiary to maintain,
and preserve all its property which is used or useful in its business in good
working order and condition, ordinary wear and tear excepted, and make all
necessary repairs thereto and renewals and replacements thereof except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect, except as permitted by Section 8.2.
69
7.6 Insurance.
---------
The Company shall maintain, and shall cause each Subsidiary to maintain,
with financially sound and reputable independent insurers, insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons.
7.7 Payment of Obligations.
----------------------
The Company shall, and shall cause each Subsidiary to, pay and discharge as
the same shall become due and payable, all their respective obligations and
liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets; and
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property;
unless the same are being contested in good faith by appropriate proceedings and
adequate reserves in accordance with GAAP are being maintained by the Company or
such Subsidiary.
7.8 Compliance with Laws.
--------------------
The Company shall comply, and shall cause each Subsidiary to comply, in all
material respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business (including the Federal Fair Labor
Standards Act), except such as may be contested in good faith or as to which a
bona fide dispute may exist.
7.9 Compliance with ERISA.
---------------------
The Company shall, and shall cause each of its ERISA Affiliates to: (a)
maintain each Plan in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law; (b) cause each
Plan which is qualified under Section 401(a) of the Code to maintain such
qualification; and (c) make all required contributions to any Plan subject to
Section 412 of the Code.
7.10 Inspection of Property and Books and Records.
--------------------------------------------
The Company shall maintain and shall cause each Subsidiary to maintain
proper books of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Company and
such Subsidiary. The Company shall permit, and shall cause each Related Entity
and each Subsidiary to permit, representatives and independent contractors of
the Agent or any Bank to visit and inspect
70
any of their respective properties, to examine their respective corporate,
financial and operating records, and make copies thereof or abstracts therefrom,
and to discuss their respective affairs, finances and accounts with their
respective directors, officers, and independent public accountants, all at the
expense of the Company and at such reasonable times during normal business hours
and as often as may be reasonably desired, upon reasonable advance notice to the
Company; provided, however, when an Event of Default exists the Agent or any
Bank may do any of the foregoing at the expense of the Company at any time
during normal business hours and without advance notice.
7.11 Environmental Laws.
------------------
The Company shall, and shall cause each Subsidiary to, conduct its
operations and keep and maintain its property in compliance with all
Environmental Laws except for such violations that could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
7.12 Use of Proceeds.
---------------
The Company shall use the proceeds of the (a) W/C Revolving Loans for
working capital and general corporate purposes, and (b) the Acquisition
Revolving Loans for the cost (including related fees, commissions and expenses)
of the acquisition of timberlands, standing timber, and related assets, and with
respect to only the initial Acquisition Revolving Loan to be made on the Closing
Date, to repay existing Indebtedness of the Company in an amount not to exceed
$26,000,000, in all cases not in contravention of any Requirement of Law or of
any Loan Document.
ARTICLE VIII
NEGATIVE COVENANTS
------------------
So long as any Bank shall have any W/C Revolving Commitment or Acquisition
Revolving Commitment hereunder, or the Swingline Bank shall have any Swingline
Commitment hereunder, or any Loan or other Obligation shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, unless the
Majority Banks waive compliance in writing:
8.1 Limitation on Liens.
-------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
directly or indirectly, make, create, incur, assume or suffer to exist any Lien
upon or with respect to any part of its property, whether now owned or hereafter
acquired, other than the following ("Permitted Liens"):
---------------
(a) any Lien existing on property of the Company or any Subsidiary on the
Closing Date and set forth in Schedule 8.1 securing Indebtedness outstanding on
------------
such date;
71
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges which
are not delinquent or remain payable without penalty, or to the extent that non-
payment thereof is permitted by Section 7.7, provided that no notice of lien has
been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', loggers', landlords',
materialmen's, repairmen's or other similar Liens (whether arising by operation
of law, contract, or otherwise) arising in the Ordinary Course of Business which
are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of pledges or
deposits required in the Ordinary Course of Business in connection with workers'
compensation, unemployment insurance and other social security legislation;
(f) Liens on the property of the Company or its Subsidiary securing (i)
the non-delinquent performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, (ii) contingent obligations on surety and
appeal bonds, and (iii) other non-delinquent obligations of a like nature; in
each case, incurred in the Ordinary Course of Business;
(g) Liens consisting of judgment or judicial attachment liens that do not
constitute an Event of Default;
(h) easements, rights-of-way, road use rights, restrictions and other
similar encumbrances incurred in the Ordinary Course of Business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Company and its Subsidiaries;
(i) Liens securing obligations in respect of Capital Leases on assets
subject to such leases, provided that such Capital Leases are not otherwise
prohibited hereunder;
(j) purchase money security interests on any property acquired or held by
the Company or its Subsidiaries in the Ordinary Course of Business, securing
Indebtedness incurred or assumed for the purpose of financing all or any part of
the cost of acquiring such property; provided that (i) any such Lien attaches to
such property concurrently with or within 30 days after the acquisition thereof,
(ii) such Lien attaches solely to the property so acquired in such transaction,
(iii) the principal amount of the debt secured thereby does not exceed 100% of
the cost of such property, and (iv) the principal amount of the Indebtedness
secured by any and all such purchase money security interests shall not at any
time exceed, together with Indebtedness permitted under subsections 8.5(e) and
(without duplication) 8.5(h), $10,000,000;
72
(k) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the FRB, and (ii) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to the depository institution; and
(l) Liens on accounts receivable, inventory and proceeds thereof to secure
the W/C Revolving Loans, the L/C Obligations, and the Swingline Loans.
8.2 Disposition of Assets.
---------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
directly or indirectly, sell, convey, transfer or otherwise dispose of any
property (including, except as permitted by subsection 8.1(l), accounts and
notes receivable, with or without recourse) or permit or suffer to occur an
Event of Loss with respect to any of its properties, or enter into any agreement
to do any of the foregoing, except:
(a) Timber Harvest in compliance with Section 8.20;
(b) sales for fair market value thereof of assets not otherwise permitted
hereunder to Persons who are not Affiliates of the Company, and Events of Loss
with respect to properties of the Company and its Subsidiaries, if:
(i) in cases of a sale, at the time of such sale no Default
or Event of Default exists or shall result from such sale; and
(ii) the Net Proceeds of such sale or Event of Loss, if and
to the extent the aggregate of all Net Proceeds of all such sales and Events of
Loss received by the Company or its Subsidiaries in any calendar year exceed the
Maximum Amount for such year are applied, within 180 days of receipt of such
excess Net Proceeds (A) to the purchase of productive assets in a Permitted
Business (including purchases not consummated during such 180 days if a binding
agreement for such purchase is entered into during such period and such purchase
is completed within 90 days after the expiry of such 180 day period), or (B) to
the purchase, repayment, or Cash Collateralization of such Senior Debt as the
Company may elect to purchase, repay, or Cash Collateralize; provided, however,
-------- -------
the Company shall not be required to apply any excess Net Proceeds pursuant to
clause (A) or (B) above if and to the extent that, when received, such excess
Net Proceeds do not exceed cash expenditures by the Company for the purchase of
productive assets in a Permitted Business during the preceding 90 days
(excluding any purchase to the extent financed by a Loan or to the extent such
purchase was previously applied as a credit to reduce repayments, repurchases,
or Cash Collateralization of Senior Debt required by this subsection 8.2(b) or
Section 8.20) (all such Net Proceeds in excess of the cash expenditures referred
to in the immediately preceding proviso being herein referred to as the "Excess
------
Asset Sales Proceeds"); and, provided further, that (1) at any time the Company
-------------------- -------- -------
shall elect to repay or purchase Senior Debt other than the Loans, the
73
Company shall also repay or Cash Collateralize Obligations by at least a pro
rata amount (based on the then outstanding principal of amount of all Senior
Debt), (2) a Responsible Officer shall have notified the Agent promptly after
its determination to so apply the Net Proceeds and shall have certified the
receipt of fair market value for such assets and the proper application of such
Net Proceeds in accordance with this subsection 8.2(b), and (3) all Excess Asset
Sales Proceeds that have not been applied to the purchase of productive assets
in a Permitted Business or distributed to the holders of Senior Debt for
application to the repayment of such Senior Debt shall be placed immediately
upon receipt thereof in an escrow account, pursuant to an Escrow Agreement, for
the purpose of application in accordance with clauses (A) and (B) above. The
Company shall apply all amounts withdrawn from escrow pursuant to an Escrow
Agreement, other than net earnings thereon arising from investment thereof as
provided in such Escrow Agreement, to the applications required by clauses (A)
or (B) above within three Business Days after such withdrawal;
(c) sales of used, worn-out or surplus equipment, in the Ordinary Course
of Business;
(d) sales of equipment to the extent that such equipment is exchanged for
credit against the purchase price of similar replacement equipment, or the
proceeds of such sale are reasonably promptly applied to the purchase price of
such replacement equipment; and
(e) simultaneous exchanges by the Company of Timberlands for other
timberlands in the Ordinary Course of Business, with Persons who are not
Affiliates of the Company, if:
(i) at the time of such exchange, no Event of Default
exists or shall result from such exchange;
(ii) the aggregate fair market value of all Timberlands so
exchanged by the Company do not exceed on a cumulative basis $100,000,000 during
the term of this Agreement;
(iii) the timberlands to be received in exchange are of at
least an equivalent fair market value to the Timberlands to be exchanged or, if
such other timberlands are not of at least an equivalent fair market value, the
amount of any shortfall shall constitute a sale under subsection 8.2(b) subject
to the requirements of subsection 2.6(a); and
(iv) the Agent has received, in form and substance
satisfactory to the Agent and the Majority Banks, copies of appraisals or
valuations for the Timberlands to be exchanged and the other timberlands to be
received in the exchange, which appraisals or valuation shall, in the case of
any exchange where the Company is transferring properties (in one or a series of
related transactions) having a fair market value in excess of $25,000,000, to be
prepared by an independent appraiser acceptable to the Agent and the Majority
Banks, and in all other cases the appraisal or other valuation may be
74
prepared by the Company in such form and content as is usual and customary in
accordance with past practices of the Company;
provided, however, that any exchange permitted by this subsection 8.2(e) may be
-------- -------
in the form of a tax deferred exchange and the conditions described in clauses
(iii) and (iv) above may be satisfied up to 180 days after the sale of the
Timberlands, so long as the aggregate sale price of the Timberlands with respect
to which timberlands have not yet been received in exchange in accordance with
this subsection 8.2(e) do not at any one time exceed $25,000,000, or, if such
sale price exceeds $25,000,000, all Net Proceeds of such sales in excess of
$25,000,000 shall be placed immediately upon receipt thereof in an escrow
account, pursuant to an Escrow Agreement, for the purpose of application in
accordance with clauses (b)(ii)(A) and (b)(ii)(C) above. The Company shall
apply any Net Proceeds withdrawn from escrow pursuant to an Escrow Agreement to
the applications required by clauses (b)(ii)(A) or (b)(ii)(C) above within three
Business Days after such withdrawal.
8.3 Consolidations and Mergers.
--------------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
merge, consolidate with or into, or convey, transfer, lease or otherwise dispose
of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except:
(a) any Subsidiary may merge with the Company, provided that the
Company shall be the continuing or surviving corporation, or with any one or
more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation; and
(b) any Subsidiary may sell all or substantially all of its assets
(upon voluntary liquidation or otherwise), to the Company or another Wholly-
Owned Subsidiary.
8.4 Loans and Investments.
---------------------
The Company shall not purchase or acquire, or suffer or permit any
Subsidiary to purchase or acquire, or make any commitment therefor, any capital
stock, equity interest, or any obligations or other securities of, or any
interest in, any Person, or make or commit to make any Acquisitions, or make or
commit to make any advance, loan, extension of credit or capital contribution to
or any other investment in, any Person including any Affiliate of the Company
(together, "Investments"), except for:
-----------
(a) subject to compliance with Section 8.20 or subsection 8.2(d), as
applicable, Acquisitions by the Company of assets constituting Timber or
Timberlands;
(b) Investments in Cash Equivalents and demand deposit accounts,
including those maintained with BofA, in each case in the manner described in
the Company's cash management program attached as Schedule 8.4(b) (subject to
---------------
restricting
75
the Investments made pursuant thereto to Cash Equivalents and demand deposit
accounts);
(c) agreements between the Company and any other Person with respect
to the disposition of Timberlands or the grant of the right to harvest any
Timber pursuant to which the payment obligation for such Timberlands or such
Timber to be harvested by such other Person is in whole or in part deferred as
long as (i) such disposition of such Timber or Timberlands is permitted by
Section 8.2 and payment therefor is required at least proportionately with the
actual harvesting of the Timber in question and (ii) the aggregate amount
outstanding under all such arrangements does not at any time exceed $25,000,000;
(d) loans and advances to officers, directors, and employees made in
the Ordinary Course of Business not to exceed $1,000,000 in the aggregate at any
one time outstanding;
(e) Permitted Swap Obligations;
(f) extensions of trade credit in the Ordinary Course of Business and
Investments acquired by reason of the exercise of customary creditors' rights
upon default or pursuant to the bankruptcy, insolvency, or reorganization of
debtors; and
(g) Investments set forth on Schedule 8.4(g).
---------------
8.5 Limitation on Indebtedness.
--------------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
create, incur, assume, suffer to exist, or otherwise become or remain directly
or indirectly liable with respect to, any Indebtedness, except:
(a) the Senior Notes;
(b) the Obligations;
(c) Indebtedness incurred pursuant to Permitted Swap Obligations;
(d) accounts payable to trade creditors for goods and services and current
operating liabilities (not the result of the borrowing of money) incurred in the
Ordinary Course of Business in accordance with customary terms and paid within
the specified time, unless contested in good faith by appropriate proceedings
and reserved for in accordance with GAAP;
(e) Indebtedness existing on the Closing Date and set forth on Schedule
--------
8.5;
---
(f) endorsements for collection or deposit in the Ordinary Course of
Business;
(g) Indebtedness incurred in connection with Capital Leases permitted
pursuant to Section 8.10;
76
(h) Indebtedness representing the deferred purchase price of specific
property acquired by the Company or a Subsidiary, whether or not secured by
Liens permitted by subsection 8.1(j), as long as the aggregate amount of such
Indebtedness, together with Indebtedness permitted by subsection 8.5(e), does
not at any time exceed $10,000,000; and
(i) Contingent Obligations permitted under Section 8.8.
8.6 Transactions with Affiliates.
----------------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
enter into any transaction with any Affiliate of the Company, except (i) as
permitted by subsection 8.4(d), (ii) Restricted Payments permitted by Section
8.11, (iii) transactions described on Schedule 8.6, and (iv) other transactions
upon fair and reasonable terms no less favorable to the Company or such
Subsidiary than would obtain in a comparable arm's-length transaction with a
Person not an Affiliate of the Company or such Subsidiary. Notwithstanding the
foregoing, the permitted transactions set forth in the foregoing sentence shall
not permit the payment to an Affiliate of compensation in the nature of
investment banking fees, placement fees or similar fees for financial advice or
consulting services without the prior consent of the Majority Banks.
8.7 Use of Proceeds.
---------------
(a) The Company shall not, and shall not suffer or permit any
Subsidiary to, use any portion of the Loan proceeds or any Letter of Credit,
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance indebtedness of the Company or others incurred to purchase
or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or
carrying any Margin Stock, or (iv) to acquire any security in any transaction
that is subject to Section 13 or 14 of the Exchange Act.
(b) The Company shall not, directly or indirectly, use any portion of
the Loan proceeds or any Letter of Credit (i) knowingly to purchase Ineligible
Securities from the Arranger during any period in which the Arranger makes a
market in such Ineligible Securities, (ii) knowingly to purchase during the
underwriting or placement period Ineligible Securities being underwritten or
privately placed by the Arranger, or (iii) to make payments of principal or
interest on Ineligible Securities underwritten or privately placed by the
Arranger and issued by or for the benefit of the Company or any Affiliate of the
Company. The Arranger is a registered broker-dealer and permitted to underwrite
and deal in certain Ineligible Securities; and "Ineligible Securities" means
---------------------
securities which may not be underwritten or dealt in by member banks of the
Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C.
(S) 24, Seventh), as amended.
8.8 Contingent Obligations.
----------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
create, incur, assume or suffer to exist any Contingent Obligations except:
77
(a) endorsements for collection or deposit in the Ordinary Course of
Business;
(b) Permitted Swap Obligations;
(c) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and listed in Schedule 8.8;
------------
(d) Contingent Obligations with respect to Surety Instruments other
than those described in subsection 8.8(f) below incurred in the Ordinary Course
of Business and not exceeding at any time $1,000,000 in the aggregate in respect
of the Company and its Subsidiaries on a consolidated basis;
(e) L/C Obligations;
(f) (i) non-delinquent bids, trade contracts (other than for borrowed
money), and statutory obligations, (ii) Contingent Obligations under surety and
appeal bonds supporting performance obligations of the Company or its
Subsidiaries, and (iii) other non-delinquent obligations of a like nature; in
each case, incurred in the Ordinary Course of Business; and
(g) Guaranty Obligations of the Company or a Subsidiary for the
Indebtedness of the Company or a Wholly-Owned Subsidiary not otherwise
prohibited hereunder.
8.9 Joint Ventures.
--------------
The Company shall not, and shall not suffer or permit any Subsidiary to
enter into any Joint Venture, other than to engage in a Permitted Business.
8.10 Lease Obligations.
-----------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
create or suffer to exist any obligations for the payment of rent for any
property under lease or agreement to lease, except for:
(a) leases of the Company and of Subsidiaries in existence on the
Closing Date and any renewal, extension or refinancing thereof;
(b) Operating Leases entered into by the Company or any Subsidiary
after the Closing Date in the Ordinary Course of Business; provided that the
--------
aggregate annual rental payments for all such Operating Leases shall not exceed
$1,000,000 in any fiscal year for the Company and its Subsidiaries on a
consolidated basis; and
(c) Capital Leases other than those permitted under subsection
8.10(a) entered into by the Company or any Subsidiary after the Closing Date to
finance the acquisition of equipment; provided that the aggregate annual rental
--------
payments for all such
78
Capital Leases shall not exceed in any fiscal year $1,000,000 for the Company
and its Subsidiaries on a consolidated basis.
8.11 Restricted Payments.
-------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities (each, a "Restricted
----------
Payment") on account of any shares of any class of its capital stock or
-------
membership interests, or purchase, redeem or otherwise acquire for value any
shares of its capital stock or membership interests or any warrants, rights or
options to acquire such shares or membership interests (collectively, "Equity
------
Interests"), now or hereafter outstanding; except that the Company and any
---------
Subsidiary may:
(a) declare and make dividend payments or other distributions payable
solely in Equity Interests of the Company or such Subsidiary, as applicable;
(b) any Subsidiary may make Restricted Payments to the Company or any
Wholly-Owned Subsidiary; and
(c) if no Default or Event of Default exists or would result from
such action, the Company may declare and make during each fiscal quarter one or
more Restricted Payments if such Restricted Payments in an aggregate amount do
not exceed Available Cash for the immediately preceding fiscal quarter.
8.12 ERISA.
-----
The Company shall not, and shall not suffer or permit any of its ERISA
Affiliates to: (a) engage in a prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan which has resulted or
could reasonably expected to result in liability of the Company and its
Subsidiaries on a consolidated basis in an aggregate amount in excess of
$5,000,000; or (b) engage in a transaction that could be subject to Section 4069
or 4212(c) of ERISA.
8.13 Change in Business.
------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
engage in any material line of business other than a Permitted Business.
8.14 Minimum Pro Forma EBITDDA to Pro Forma Interest Expense.
-------------------------------------------------------
The Company shall not permit the ratio at the end of any fiscal quarter for
the four quarters then ending of Pro Forma EBITDDA to Pro Forma Interest Expense
(as measured on a Rolling Four Quarter Basis) to be less than (a) from the
Closing Date through June 30, 1998, 2.10:1.0, (b) thereafter and through June
30, 1999, 2.25:1.0, and (c) thereafter, 2.35:1.0.
79
8.15 Maximum Funded Debt to Pro Forma EBITDDA.
----------------------------------------
The Company shall not permit the ratio of Funded Debt to Pro Forma
EBITDDA (as measured on a Rolling Four Quarter Basis) to be greater than (a)
from the Closing Date through June 30, 1998, 5.25:1.0, (b) thereafter and
through June 30, 1999, 4.75:1.0, and (c) thereafter, 4.50:1.0.
8.16 Minimum Asset Value to Funded Debt Ratio.
----------------------------------------
The Company shall not permit the Asset Value to Funded Debt Ratio, as
measured as of the last day of any fiscal quarter, to be less than 1.75:1.0.
8.17 Accounting Changes.
------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
make any significant change in accounting treatment or reporting practices,
except as required or permitted by GAAP.
8.18 Amendments to Documents.
-----------------------
The Company shall not, and shall not suffer or permit any other Person to
amend, modify, supplement, waive or otherwise modify any of the terms and
provisions contained in the Partnership Agreement or Operating Agreement (or any
document executed or delivered in connection with such Partnership Agreement or
Operating Agreement), or the partnership certificate of the MLP, or the Senior
Note Agreement, if such amendment, supplement or other modification shall impair
the Company's ability to perform its obligations under the Loan Documents,
further impair the rights of the Company to grant security for the Obligations,
expand the circumstances under which an event of default could arise under the
Senior Note Agreement, or increase any of its financial obligations to any of
its members.
8.19 Limitation on Voluntary Payments on Senior Notes.
------------------------------------------------
The Company shall not, and shall not permit any of its Subsidiaries to
make any voluntary or optional payment or prepayment on or redemption or
acquisition for value of (including by way of depositing with respect thereto
money or securities before due for the purpose of paying when due) the Senior
Notes, except as contemplated by Sections 4.16 or 4.17 of the Senior Note
Agreement as in effect on the Closing Date, subject to the requirements of
subsections 2.6(a) and 8.2(b) and Section 8.20.
8.20 Harvesting Restrictions.
-----------------------
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, in any calendar year commencing with 1998, permit aggregate
Timber Harvest in excess of:
(a) in any one such calendar year, 150% of the Planned Volume for
that calendar year;
80
(b) in any two such consecutive calendar years, 140% of the Planned
Volume for such calendar years;
(c) in any three such consecutive calendar years, 130% of the Planned
Volume for such calendar years; and
(d) in any four such consecutive calendar years, 120% of the Planned
Volume for such calendar years;
unless the Net Proceeds from such excess Timber Harvest are, within ten Business
Days after the end of such period, placed in an escrow account, pursuant to an
Escrow Agreement, to be applied within 180 days after the end of such period (i)
to the purchase, repayment, or Cash Collateralization of such Senior Debt as the
Company may elect to so purchase, prepay, or Cash Collateralize as long as, at
any time the Company shall elect to repay or purchase Senior Debt other than the
Loans, the Company shall also repay or Cash Collateralize Obligations by at
least a pro rata amount (based on the outstanding principal of all Senior Debt),
or (ii) to purchase or commit to purchase productive assets in a Permitted
Business (including purchases not consummated during such 180 days if a binding
agreement for such purchase is entered into during such period and such purchase
is completed within 90 days after the expiry of such 180 day period); provided,
--------
however, the Company shall not be required to apply the proceeds of any excess
-------
Timber Harvest pursuant to clause (i) or (ii) above if and to the extent that,
when received, such excess Net Proceeds do not exceed cash expenditures by the
Company for the purchase of productive assets in a Permitted Business during the
preceding 90 days (excluding any purchase to the extent financed by a Loan or to
the extent such purchase was previously applied as a credit to reduce
repayments, repurchases, or Cash Collateralization of Senior Debt required by
this Section 8.20 or subsection 8.2(b)) (all such Net Proceeds in excess of the
cash expenditures referred to in the immediately preceding proviso being herein
referred to as "Excess Timber Harvest Proceeds"). The Company shall apply any
------------------------------
amounts withdrawn from the escrow account pursuant to an Escrow Agreement, other
than net earnings thereon arising from investment thereof as provided in such
Escrow Agreement, to the applications required by clauses (i) or (ii) above
within three Business Days after such withdrawal.
ARTICLE IX
EVENTS OF DEFAULT
-----------------
9.1 Event of Default.
----------------
Any of the following shall constitute an "Event of Default":
----------------
(a) Non-Payment.
-----------
The Company fails to pay, when and as required to be paid herein, (i)
any amount of principal of any Loan or of any L/C Obligation, or (ii) any
interest, fee or any
81
other amount payable hereunder or under any other Loan Document, and in the case
of this clause (ii), such failure continues for three Business Days; or
(b) Representation or Warranty.
--------------------------
Any representation or warranty by the Company or any Subsidiary made
or deemed made herein, in any other Loan Document, or which is contained in any
certificate, document or financial or other statement by the Company, any
Subsidiary, or any Responsible Officer, furnished at any time under this
Agreement, or in or under any other Loan Document, is incorrect in any material
respect on or as of the date made or deemed made; or
(c) Specific Defaults.
-----------------
The Company (i) fails to perform or observe any term, covenant or
agreement contained in any of Section 7.1, Section 7.2, or subsections 7.3(b),
(c), (d), or (e) and such failure continues for 20 days, or (ii) fails to
perform or observe any term, covenant or agreement contained in subsection
7.3(a) or Article VIII; or
(d) Other Defaults.
--------------
The Company or any Subsidiary party thereto fails to perform or
observe any other term or covenant contained in this Agreement or any other Loan
Document, and such default shall continue unremedied for a period of 20 days
after the earlier of (i) the date upon which a Responsible Officer knew or
reasonably should have known of such failure or (ii) the date upon which written
notice thereof is given to the Company by the Agent or any Bank; or
(e) Cross-Default.
-------------
(i) The Company or any Subsidiary (A) fails to make any payment in
respect of any Indebtedness or Contingent Obligation (other than in respect of
Swap Contracts), having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $10,000,000
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the relevant document on the date of such
failure; or (B) fails to perform or observe any other condition or covenant, or
any other event shall occur or condition exist, under any agreement or
instrument relating to any such Indebtedness or Contingent Obligation, and such
failure continues after the applicable grace or notice period, if any, specified
in the relevant document on the date of such failure if the effect of such
failure, event or condition is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such Indebtedness to be declared to be due and payable
prior to its stated maturity, or such Contingent Obligation to become payable or
cash collateral in respect thereof to be demanded; or (ii) there occurs under
any Swap Contract an Early Termination Date (as defined in such Swap
82
Contract) resulting from (1) any event of default under such Swap Contract as to
which the Company or any Subsidiary is the Defaulting Party (as defined in such
Swap Contract) or (2) any Termination Event (as so defined) as to which the
Company or any Subsidiary is an Affected Party (as so defined), and, in either
event, the Swap Termination Value owed by the Company or such Subsidiary as a
result thereof is greater than $10,000,000; or
(f) Insolvency; Voluntary Proceedings.
---------------------------------
The Company or any Subsidiary (i) ceases or fails to be solvent, or
generally fails to pay, or admits in writing its inability to pay, its debts as
they become due, subject to applicable grace periods, if any, whether at stated
maturity or otherwise; (ii) voluntarily ceases to conduct its business in the
ordinary course; (iii) commences any Insolvency Proceeding with respect to
itself; or (iv) takes any action to effectuate or authorize any of the
foregoing; or
(g) Involuntary Proceedings.
-----------------------
(i) Any involuntary Insolvency Proceeding is commenced or filed
against the Company or any Subsidiary, or any writ, judgment, warrant of
attachment, execution or similar process, is issued or levied against a
substantial part of the Company's or any Subsidiary's properties, and any such
proceeding or petition shall not be dismissed, or such writ, judgment, warrant
of attachment, execution or similar process shall not be released, vacated or
fully bonded within 60 days after commencement, filing or levy; (ii) the Company
or any Subsidiary admits the material allegations of a petition against it in
any Insolvency Proceeding, or an order for relief (or similar order under non-
U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Company or any
Subsidiary acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its property or business;
or
(h) ERISA.
-----
(i) An ERISA Event shall occur with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Company under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $10,000,000;
the aggregate amount of Unfunded Pension Liability among all Pension Plans at
any time exceeds $10,000,000; or (iii) the Company or any ERISA Affiliate shall
fail to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$10,000,000; or
(i) Monetary Judgments.
------------------
One or more non-interlocutory judgments, non-interlocutory orders,
decrees or arbitration awards is entered against the Company or any Subsidiary
involving in the aggregate a liability (to the extent not covered by independent
third-party insurance
83
as to which the insurer does not dispute coverage) as to any single or related
series of transactions, incidents or conditions, of $10,000,000 or more, and the
same shall remain unsatisfied, unvacated and unstayed pending appeal for a
period of 10 days after the entry thereof; or
(j) Non-Monetary Judgments.
----------------------
Any non-monetary judgment, order or decree is entered against the
Company or any Subsidiary which does or would reasonably be expected to have a
Material Adverse Effect, and there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect.
9.2 Remedies.
--------
If any Event of Default occurs, the Agent shall, at the request of, or
may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank and the Swingline Commitment
of the Swingline Bank to make Loans and any obligation of the Issuing Bank to
Issue Letters of Credit to be terminated, whereupon such commitments and
obligation shall be terminated;
(b) declare an amount equal to the maximum aggregate amount that is
or at any time thereafter may become available for drawing under any outstanding
Letters of Credit (whether or not any beneficiary shall have presented, or shall
be entitled at such time to present, the drafts or other documents required to
draw under such Letters of Credit) to be immediately due and payable as Cash
Collateral for the L/C Obligations, and declare the unpaid principal amount of
all outstanding Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Company;
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law; and
provided, however, that upon the occurrence of any event specified in subsection
-------- -------
(f) or (g) of Section 9.1 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
and the Swingline Bank to make Loans and any obligation of the Issuing Bank to
Issue Letters of Credit shall automatically terminate and the unpaid principal
amount of all outstanding Loans and all interest and other amounts as aforesaid
shall automatically become due and payable without further act of the Agent, the
Issuing Bank, the Swingline Bank or any Bank.
84
9.3 Rights Not Exclusive.
--------------------
The rights provided for in this Agreement and the other Loan Documents are
cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document
or agreement now existing or hereafter arising.
ARTICLE X
THE AGENT
---------
10.1 Appointment and Authorization; "Agent".
--------------------------------------
(a) Each Bank hereby irrevocably (subject to Section 10.9) appoints,
designates and authorizes the Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship
with any Bank, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent. Without limiting the generality
of the foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
(b) The Issuing Bank shall act on behalf of the Banks with respect to
any Letters of Credit Issued by it and the documents associated therewith until
such time and except for so long as the Agent may agree at the request of the
Majority Banks to act for such Issuing Bank with respect thereto; provided,
however, that the Issuing Bank shall have all of the benefits and immunities (i)
provided to the Agent in this Article X with respect to any acts taken or
omissions suffered by the Issuing Bank in connection with Letters of Credit
Issued by it or proposed to be Issued by it and the application and agreements
for letters of credit pertaining to the Letters of Credit as fully as if the
term "Agent", as used in this Article X, included the Issuing Bank with respect
to such acts or omissions, and (ii) as additionally provided in this Agreement
with respect to the Issuing Bank.
10.2 Delegation of Duties.
--------------------
The Agent may execute any of its duties under this Agreement or any other
Loan Document by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not
85
be responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
10.3 Liability of Agent.
------------------
None of the Agent-Related Persons shall (i) be liable for any action taken
or omitted to be taken by any of them under or in connection with this Agreement
or any other Loan Document or the transactions contemplated hereby (except for
its own gross negligence or willful misconduct), or (ii) be responsible in any
manner to any of the Banks for any recital, statement, representation or
warranty made by the Company or any Subsidiary or Affiliate of the Company, or
any officer thereof, contained in this Agreement or in any other Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Company or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Company or any of the Company's Subsidiaries
or Affiliates.
10.4 Reliance by Agent.
-----------------
(a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to the Company), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Banks or the Majority Banks, as the case may be, as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by the
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Banks or the Majority Banks, as the case may be, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 5.1, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Bank.
86
10.5 Notice of Default.
-----------------
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default, except with respect to defaults
in the payment of principal, interest and fees required to be paid to the Agent
for the account of the Banks, unless the Agent shall have received written
notice from a Bank or the Company referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". The Agent will notify the Banks of its receipt of any such notice. The
Agent shall take such action with respect to such Default or Event of Default as
may be requested by the Majority Banks in accordance with Article IX; provided,
however, that unless and until the Agent has received any such request, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable or in the best interest of the Banks.
10.6 Credit Decision.
---------------
Each Bank acknowledges that none of the Agent-Related Persons has made any
representation or warranty to it, and that no act by the Agent hereinafter
taken, including any review of the affairs of the Company and its Subsidiaries,
shall be deemed to constitute any representation or warranty by any Agent-
Related Person to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Company and its Subsidiaries hereunder.
Each Bank also represents that it will, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by the Agent, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any of the
Agent-Related Persons.
10.7 Indemnification of Agent.
------------------------
Whether or not the transactions contemplated hereby are consummated, the
Banks shall indemnify upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of the Company and without limiting the obligation of
the Company to do so), pro rata, from and against any and all Indemnified
Liabilities; provided, however, that no Bank shall be liable for the payment to
the Agent-Related Persons of any portion
87
of such Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each Bank
shall reimburse the Agent upon demand for its ratable share of any costs or out-
of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
10.8 Agent in Individual Capacity.
----------------------------
BofA and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with the Company and its Subsidiaries and Affiliates as though BofA
were not the Agent, the Swingline Bank or the Issuing Bank hereunder and without
notice to or consent of the Banks. The Banks acknowledge that, pursuant to such
activities, BofA or its Affiliates may receive information regarding the Company
or its Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company or such Subsidiary) and acknowledge that the
Agent shall be under no obligation to provide such information to them. With
respect to its Loans, BofA shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it were not the
Agent or the Issuing Bank.
10.9 Successor Agent.
---------------
The Agent may, and at the request of the Majority Banks shall, resign as
Agent upon 30 days' notice to the Banks. If the Agent resigns under this
Agreement, the Majority Banks shall appoint from among the Banks a successor
agent for the Banks, which successor agent, unless a Default or Event of Default
exists, shall be approved by the Company. If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the Agent may
appoint, after consulting with the Banks and the Company, a successor agent from
among the Banks. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article X and Sections 11.4 and 11.5 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent by
the date which is 30 days following a retiring Agent's notice of resignation,
the retiring Agent's resignation shall nevertheless thereupon become effective
and the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Majority Banks appoint a successor agent as provided for
above. Notwithstanding the foregoing, however, BofA may not be
88
removed as the Agent at the request of the Majority Banks unless BofA shall also
simultaneously be replaced as "Issuing Bank" and "Swingline Bank" hereunder
pursuant to documentation in form and substance reasonably satisfactory to BofA.
10.10 Withholding Tax.
---------------
(a) If any Bank is a "foreign corporation, partnership or trust" within
the meaning of the Code and such Bank claims exemption from, or a reduction of,
U.S. withholding tax under Sections 1441 or 1442 of the Code, such Bank agrees
with and in favor of the Agent, to deliver to the Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two properly completed and
executed copies of IRS Form 1001 before the payment of any interest in the first
calendar year and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two properly
completed and executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Bank and in each succeeding
taxable year of such Bank during which interest may be paid under this
Agreement; and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of, withholding tax
under a United States tax treaty by providing IRS Form 1001 and such Bank sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of the Company to such Bank, such Bank agrees to notify the Agent of
the percentage amount in which it is no longer the beneficial owner of
Obligations of the Company to such Bank. To the extent of such percentage
amount, the Agent will treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax by
filing IRS Form 4224 with the Agent sells, assigns, grants a participation in,
or otherwise transfers all or part of the Obligations of the Company to such
Bank, such Bank agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable withholding
tax, the Agent may withhold from any interest payment to such Bank an amount
equivalent to the applicable withholding tax after taking into account such
reduction. However, if the
89
forms or other documentation required by subsection (a) of this Section are not
delivered to the Agent, then the Agent may withhold from any interest payment to
such Bank not providing such forms or other documentation an amount equivalent
to the applicable withholding tax imposed by Sections 1441 and 1442 of the Code,
without reduction.
(e) If the IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that the Agent did not properly withhold tax
from amounts paid to or for the account of any Bank (because the appropriate
form was not delivered or was not properly executed, or because such Bank failed
to notify the Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other reason)
such Bank shall indemnify the Agent fully for all amounts paid, directly or
indirectly, by the Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this Section, together with all costs and expenses (including
Attorney Costs). The obligation of the Banks under this subsection shall survive
the payment of all Obligations.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Amendments and Waivers.
----------------------
No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by the Company
therefrom, shall be effective unless the same shall be in writing and signed by
the Majority Banks (or by the Agent at the written request of the Majority
Banks) and the Company and acknowledged by the Agent, and then any such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that
-------- -------
(a) no such waiver, amendment or consent shall, unless in writing and
signed by all Banks and the Company, with receipt acknowledged by the Agent, do
any of the following:
(i) increase or extend the Commitments of any Bank, or increase
or extend the Swingline Commitment of the Swingline Bank (or reinstate any such
Commitment terminated pursuant to Section 8.2); or
(ii) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder or under any other Loan
Document, including any prepayments specified under Section 2.6, or reduce the
amount due to the Banks (or any of them) on any such date; or
(iii) reduce the principal of, or the rate of interest or
commitment or other fee specified herein on, any Loan or the Commitments or,
subject to clause (C) the
90
proviso below, any other amounts payable to the Banks (or any of them) hereunder
-------
or under any other Loan Document; or
(iv) amend any provision herein providing for consent or other
action by all Banks; or
(v) amend the definition of Majority Banks contained in Section
1.1;
and, provided, further, that (A) no amendment, waiver or consent shall, unless
-------- -------
in writing and signed by the Issuing Bank in addition to the Majority Banks or
all the Banks, as the case may be, affect the rights or duties of the Issuing
Bank under this Agreement or any L/C-Related Document relating to any Letter of
Credit Issued or to be Issued by it, (B) no amendment, waiver or consent shall,
unless in writing and signed by the Agent in addition to the Majority Banks or
all the Banks, as the case may be, affect the rights or duties of the
Administrative Lender under this Agreement or any other Loan Document, (C) the
Fee Letter may be amended, or rights or privileges thereunder waived, in a
writing executed by the parties thereto, and (D) no amendment, waiver or consent
shall, unless in writing and signed by the Swingline Bank in addition to the
Majority Banks or all the Banks, as the case may be, affect the rights or duties
of the Swingline Lender under this Agreement or any other Loan Document.
11.2 Notices.
-------
(a) All notices, requests, consents, approvals, waivers and
other communications shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided that any
matter transmitted by the Company by facsimile (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on
Schedule 11.2, and (ii) shall be followed promptly by delivery of a hard copy
original thereof) and mailed, faxed or delivered, to the address or facsimile
number specified for notices on Schedule 11.2; or, as directed to the Company or
the Agent, to such other address as shall be designated by such party in a
written notice to the other parties, and as directed to any other party, at such
other address as shall be designated by such party in a written notice to the
Company and the Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II, III or X to the Agent shall not be effective
until actually received by the Agent, and notices pursuant to Article III to the
Issuing Bank shall not be effective until actually received by the Issuing Bank
at the address specified for the "Issuing Bank" on the applicable signature page
hereof.
(c) Any agreement of the Agent and the Banks herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Company. The Agent and the Banks shall be entitled to rely on
the authority of
91
any Person purporting to be a Person authorized by the Company to give such
notice and the Agent and the Banks shall not have any liability to the Company
or other Person on account of any action taken or not taken by the Agent or the
Banks in reliance upon such telephonic or facsimile notice. The obligation of
the Company to repay the Loans and L/C Obligations shall not be affected in any
way or to any extent by any failure by the Agent and the Banks to receive
written confirmation of any telephonic or facsimile notice or the receipt by the
Agent and the Banks of a confirmation which is at variance with the terms
understood by the Agent and the Banks to be contained in the telephonic or
facsimile notice.
11.3 No Waiver; Cumulative Remedies.
------------------------------
No failure to exercise and no delay in exercising, on the part of the
Agent or any Bank, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
11.4 Costs and Expenses. The Company shall:
------------------
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Agent and
Issuing Bank) within five Business Days after demand (subject to subsection
5.1(d)) for all reasonable costs and expenses incurred by BofA (including in its
capacity as Agent and Issuing Bank) in connection with the development,
preparation, delivery, administration, execution and initial syndication of, and
any amendment, supplement, waiver or modification to (in each case, whether or
not consummated), this Agreement, any Loan Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including reasonable Attorney
Costs incurred by BofA (including in its capacity as Agent and Issuing Bank)
with respect thereto; and
(b) pay or reimburse the Agent, the Arranger and each Bank
within five Business Days after demand (subject to subsection 5.1(d)) for all
costs and expenses (including Attorney Costs) incurred by them in connection
with the enforcement, attempted enforcement, or preservation of any rights or
remedies under this Agreement or any other Loan Document during the existence of
an Event of Default or after acceleration of the Loans (including in connection
with any "workout" or restructuring regarding the Loans, and including in any
Insolvency Proceeding or appellate proceeding).
11.5 Company Indemnification.
-----------------------
Whether or not the transactions contemplated hereby are consummated, the
Company shall indemnify, defend and hold the Agent-Related Persons, and each
Bank and each of its respective officers, directors, employees, counsel, agents,
Affiliates, and attorneys-in-fact (each, an "Indemnified Person") harmless from
------------------
and against any and all
92
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including reasonable Attorney Costs)
of any kind or nature whatsoever which may at any time (including at any time
following repayment of the Loans, the termination of the Letters of Credit and
the termination, resignation or replacement of the Agent or replacement of any
Bank) be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or any document contemplated by or
referred to herein, or the transactions contemplated hereby, the Debt Offering,
the Equity Offering, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement or the Loans
or Letters of Credit or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Company shall have no obligation
-----------------------
hereunder to any Indemnified Person with respect to Indemnified Liabilities
resulting solely from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section shall survive payment of all
other Obligations.
11.6 Payments Set Aside.
------------------
To the extent that the Company makes a payment to the Agent or the Banks,
or the Agent or the Banks exercise their right of set-off, and such payment or
the proceeds of such set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Agent or such Bank in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Bank
severally agrees to pay to the Agent upon demand its pro rata share of any
amount so recovered from or repaid by the Agent.
11.7 Successors and Assigns.
----------------------
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of the Agent
and each Bank.
11.8 Assignments, Participations, etc.
--------------------------------
(a) Any Bank may, with the written consent of the Company (at
all times other than during the existence of an Event of Default), the Agent and
the Issuing Bank, which consent of the Company shall not be unreasonably
withheld, at any time assign and delegate to one or more Eligible Assignees
(provided that no written consent of the Company, the Agent or the Issuing Bank
shall be required in connection with any assignment and delegation by a Bank to
an Eligible Assignee that is an Affiliate of such Bank) (each an "Assignee")
all, or any ratable part of all, of the Loans, the Commitments,
93
the L/C Obligations and the other rights and obligations of such Bank hereunder,
in a minimum amount of $10,000,000; provided, however, that (i) such assignment
-------- -------
shall be null and void if not undertaken on a pro rata basis between the
Acquisition Revolving Loans and Commitments and the W/C Revolving Loans and
Commitments; (ii) the Company and the Agent may continue to deal solely and
directly with such Bank in connection with the interest so assigned to an
Assignee until written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to the Company and the Agent by such Bank and the
Assignee; (iii) such Bank and its Assignee shall have delivered to the Company
and the Agent an Assignment and Acceptance in the form of Exhibit E ("Assignment
--------- ----------
and Acceptance") together with any Note or Notes subject to such assignment; and
--------------
(iv) the assignor Bank or Assignee has paid to the Agent a processing fee in the
amount of $3,500. In connection with any assignment by BofA, its Swingline
Commitment may be in whole but not in part included as part of the assignment
transaction, and the Assignment and Acceptance may be appropriately modified to
include an assignment and delegation of its Swingline Commitment and any
outstanding Swingline Loans.
(b) From and after the date that the Agent notifies the assignor Bank
that it has received (and, to the extent required by subsection 11.8(a),
provided its consent with respect to) an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of a Bank under the Loan Documents, and (ii) the
assignor Bank shall, to the extent that rights and obligations hereunder and
under the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the
Agent that it has received an executed Assignment and Acceptance and payment of
the processing fee, (and provided that it consents to such assignment if such
consent is required by subsection 11.8(a)), upon the request of the Assignee,
the Company shall execute and deliver to the Agent, upon the request of any
Assignee, new Notes evidencing such Assignee's assigned Loans and Commitment
and, if the assignor Bank has retained a portion of its Loans and its
Commitment, replacement Notes (if any) in the principal amount of the Loans
retained by the assignor Bank (such Notes to be in exchange for, but not in
payment of, the Notes held by such Bank). Immediately upon each Assignee's
making its processing fee payment under the Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. The Commitment allocated to each Assignee
shall reduce such Commitments of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Company (a "Participant") participating
-----------
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the
94
"originating Bank") hereunder and under the other Loan Documents; provided,
---------------- --------
however, that (i) such participation shall be null and void unless undertaken on
-------
a pro rata basis between the Acquisition Revolving Loans and Commitments and the
W/C Revolving Loans and Commitments, (ii) the originating Bank's obligations
under this Agreement shall remain unchanged, (iii) the originating Bank shall
remain solely responsible for the performance of such obligations, (iv) the
Company, the Issuing Bank and the Agent shall continue to deal solely and
directly with the originating Bank in connection with the originating Bank's
rights and obligations under this Agreement and the other Loan Documents, and
(v) no Bank shall transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the extent
such amendment, consent or waiver would require unanimous consent of the Banks
as described in the first proviso to Section 11.1. In the case of any such
participation, the Participant shall be entitled to the benefit of Sections 4.1,
4.3 and 11.5 as though it were also a Bank hereunder, and if amounts outstanding
under this Agreement are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement and the Note(s) held by it in
favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or
U.S. Treasury Regulation 31 CFR (S)203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
11.9 Confidentiality.
---------------
Each Bank agrees to take and to cause its Affiliates to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all information identified as "confidential" or "secret" by the Company and
provided to it by the Company or any Subsidiary, or by the Agent on the
Company's or such Subsidiary's behalf, under this Agreement or any other Loan
Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this Agreement
and the other Loan Documents or in connection with other business now or
hereafter existing or contemplated with the Company or any Subsidiary; except to
the extent such information (i) was or becomes generally available to the public
other than as a result of disclosure by that Bank, or (ii) was or becomes
available on a non-confidential basis from a source other than the Company,
provided that such source is not bound by a confidentiality agreement with the
Company known to the Bank; provided, however, that any Bank may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required
95
in connection with any litigation or proceeding to which the Agent, any Bank or
their respective Affiliates may be party; (E) to the extent reasonably required
in connection with the exercise of any remedy hereunder or under any other Loan
Document; (F) to such Bank's independent auditors and other professional
advisors; (G) to any Participant or Assignee, actual or potential, provided that
such Person agrees in writing to keep such information confidential to the same
extent required of the Banks hereunder; (H) as to any Bank or its Affiliate, as
expressly permitted under the terms of any other document or agreement regarding
confidentiality to which the Company or any Subsidiary is party or is deemed
party with such Bank or such Affiliate; and (I) subject to such Bank's
undertaking on behalf of its Affiliates in the first sentence of this Section,
to its Affiliates.
11.10 Set-off.
-------
In addition to any rights and remedies of the Banks provided by law, if
an Event of Default exists or the Loans have been accelerated, each Bank is
authorized at any time and from time to time, without prior notice to the
Company, any such notice being waived by the Company to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Bank to or for the credit or the account
of the Company against any and all Obligations owing to such Bank, now or
hereafter existing, irrespective of whether or not the Agent or such Bank shall
have made demand under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured. Each Bank agrees promptly to notify
the Company and the Agent after any such set-off and application made by such
Bank; provided, however, that the failure to give such notice shall not affect
the validity of such set-off and application.
11.1 Automatic Debits of Fees.
------------------------
With respect to any fee, or any other cost or expense (including Attorney
Costs) due and payable to the Agent, the Issuing Bank, the Swingline Bank, BofA
or the Arranger under the Loan Documents, the Company hereby irrevocably
authorizes BofA to debit any deposit account of the Company with BofA in an
amount such that the aggregate amount debited from all such deposit accounts
does not exceed such fee or other cost or expense. If there are insufficient
funds in such deposit accounts to cover the amount of the fee or other cost or
expense then due, such debits will be reversed (in whole or in part, in BofA's
sole discretion) and such amount not debited shall be deemed to be unpaid. No
such debit under this Section shall be deemed a set-off.
11.12 Notification of Addresses, Lending Offices, Etc.
-----------------------------------------------
Each Bank shall notify the Agent in writing of any changes in the address
to which notices to the Bank should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Agent shall
reasonably request.
96
11.13 Counterparts.
------------
This Agreement may be executed in any number of separate counterparts,
each of which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument.
11.14 Severability.
------------
The illegality or unenforceability of any provision of this Agreement or
any instrument or agreement required hereunder shall not in any way affect or
impair the legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.
11.15 No Third Parties Benefited.
--------------------------
This Agreement is made and entered into for the sole protection and legal
benefit of the Company, the Banks, the Swingline Bank, the Agent, the Agent-
Related Persons, and the Indemnified Persons and their permitted successors and
assigns, and no other Person shall be a direct or indirect legal beneficiary of,
or have any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents. Neither the Agent, the Swingline
Bank, the Issuing Bank nor any Bank shall have any obligation to any Person not
a party to this Agreement or other Loan Documents.
11.6 Governing Law and Jurisdiction.
------------------------------
(a) THIS AGREEMENT AND ANY NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENT
AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE COUNTY AND STATE OF
NEW YORK, THE COURTS OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF THE STATE
OF NEW YORK, THE COURTS OF THE STATE OF CALIFORNIA LOCATED IN THE CITY AND
COUNTY OF SAN FRANCISCO, OR THE COURTS OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF
THE COMPANY, THE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE
COMPANY, THE AGENT AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL
97
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY NEW YORK OR CALIFORNIA LAW.
11.7 Waiver of Jury Trial.
--------------------
THE COMPANY, THE BANKS AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO
A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF
ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-
RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS AND THE AGENT EACH
AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT
THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION
AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
11.18 Entire Agreement.
----------------
This Agreement, together with the other Loan Documents, embodies the
entire agreement and understanding among the Company, the Banks, the Swingline
Bank and the Agent, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
98
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
U.S. TIMBERLANDS KLAMATH FALLS, L.L.C.
By: U.S. TIMBERLANDS SERVICES COMPANY, L.L.C.,
its Managing Member
By: /s/ Xxxx X. Xxxxx
-----------------------------------------------
Name: Xxxx X. Xxxxx
Title: Chairman
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent, as a Bank, as Issuing Bank, and as
Swingline Bank
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
99
Schedule 2.1
Commitments and Pro Rata Shares
Acquisition Revolving Commitments
---------------------------------
Bank Commitment Pro Rata Share
---- ---------- --------------
Bank of America National
Trust and Savings Association $75,000,000 100%
------------------------------------------------------------------------------------------------
TOTAL $75,000,000 100%
W/C Revolving Commitments
-------------------------
Bank Commitment Pro Rata Share
---- ---------- --------------
Bank of America National
Trust and Savings Association $25,000,000 100%
------------------------------------------------------------------------------------------------
TOTAL $25,000,000 100%
Schedule 8.4(b)
Cash Management Program
BANK ACCOUNTS
-------------
The Company will maintain bank accounts with a member of its banking group at
its corporate headquarters in Klamath Falls. The bank accounts will be under the
direction of the Chief Financial officer, which authority may be delegated to
the Controller. Xxxxx cash accounts will be maintained at each of the remote
locations, and cash will be reimbursed to the xxxxx cash accounts from the main
bank accounts in Klamath Falls upon receipt of approved documentation showing
disbursement of funds.
INTERNAL CONTROL PROCEDURES - CASH DISBURSEMENTS
------------------------------------------------
See attached memo regarding cash disbursement Internal control procedures.
INTERNAL CONTROL PROCEDURES - CASH RECEIPTS
-------------------------------------------
The company will implement a lockbox cash receipts system as soon as possible
after the closing to control cash receipts.
INVESTMENT POLICY
-----------------
See attached draft of Investment policy memo.
Schedule 8.4(g)
Existing Investments
U. S. Timberlands Finance Corporation in the amount of $1,000,000.
Various Bank Accounts consistent with Schedule 8.4(b)
Schedule 8.5
Permitted Indebtedness
Until the Closing Date, (1) indebtedness to the lenders under the Existing
Credit Agreement and the Holdings Credit Agreement and (2) indebtedness to Old
Services.
Schedule 8.6
Transactions With Affiliates
ACQUISITION FEES
The Compensation Committee expects to adopt a policy to compensate individuals,
including directors of the Managing Member, who bring to the Company acquisition
transactions that ultimately are consummated, at levels that reflect the market
for such fees from time to time, but in no event shall such compensation to
directors of the Managing Member with respect to an acquisition exceed 0.25% of
the purchase price of such acquisition.
CONSULTING AGREEMENTS
The Managing Member intends to enter into consulting agreements with each of
Duck Creek Associates (a consulting firm affiliated with Xx. Xxxxxx), Xxxxxx
Xxxx Associates (a consulting firm affiliated with Xx. Xxxx), Xxxxxx X. Xxxxxx
Associates, Inc. (a consulting firm affiliated with Xx. Xxxxxx) and Xxxxxx X.
Xxxxxxx pursuant to which each such person or firm will provide consulting
services to the General Partner. Each such agreement will provide for an annual
retainer of $25,000, plus $150 per hour (with a maximum per diem of $1,200) for
services rendered at the request of the Managing Member. In addition, Xxxx
Xxxxxxxx'x employment agreement provides that, upon his resignation as President
and Chief Executive Officer of the Managing Member, he will enter into a
consulting arrangement with an annual retainer of $25,000, plus $200 per hour
(with a maximum per diem of $1,600) for services rendered at the request of the
Managing Member.
RELATED PARTY TRANSACTIONS
Pursuant to an agreement dated as of July 29, 1997 between Xx. Xxxxxxxx and the
Company, Old Services, Xx. Xxxxx and certain of his affiliates, Xx. Xxxxxxxx'x
interest in Old Services will be redeemed for 95,238 Subordinated Units in the
MLP and $1.0 million payable in January 1998. Pursuant to an agreement dated as
of July 29, 1997 between Xx. Xxxxxx and the Company, Old Services, Xx. Xxxxx and
certain of his affiliates, Xx. Xxxxxx'x interest in Old Services will be
redeemed in connection with the Equity Issuance for 48,160 Subordinated Units in
the MLP.
Schedule 8.8
Contingent Obligations
None
Schedule 11.2
Offshore and Domestic Lending Offices,
Addresses for Notices
U.S. TIMBERLANDS KLAMATH FALLS, L.L.C.
--------------------------------------
X.X. Xxx 00
0000 Xxxxxxx 00
Xxxxxxx Xxxxx, Xxxxxx 00000
Attn: Xxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
------------------------------------------------------
as Agent
Bank of America National Trust
and Savings Association
Paper & Forest Products #9973
000 Xxxxxxxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: X. X. Xxxxx, Managing Director
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
--------------
Bank of America National Trust and Savings Association
Agency Administrative Services #5596
0000 Xxxxxxx Xxxx.
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Agent's Payment Office:
Bank of America National Trust and Savings Association
ABA 000-000-000
Attention: Agency Administrative Services
0000 Xxxxxxx Xxxx.
Xxxxxxx, XX 00000
for credit to account No.: 12337-15643
Domestic and Offshore Lending Office:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
Global Payment Operations
Customer Service Americas (#5693)
0000 Xxxxxxx Xxxx.
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
ABA 000-000-000 SF
Notices (other than Borrowing notices and Notices of Conversion/Continuation):
Bank of America National Trust and Savings Association
Paper & Forest Products #9973
000 Xxxxxxxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: X. X. Xxxxx, Managing Director
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
------------------------------------------------------
as Issuing Bank
Address for notices as Issuing Bank:
Bank of America National Trust and Savings Association
Trade Operations Center #22621
000 X. Xxxxxxx Xxx., 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Exhibit A
FORM OF NOTICE OF BORROWING
Date: __________________
To: Bank of America National Trust and Savings Association, as Agent for the
Banks parties to the Credit Agreement dated as of November 19, 1997 (as
extended, renewed, amended or restated from time to time, the "Credit
------
Agreement") among U.S. Timberlands Klamath Falls, L.L.C., certain Banks
---------
that are signatories thereto, and Bank of America National Trust and
Savings Association, as Issuing Bank, as Swingline Bank and as Agent for
and on behalf of each of the Banks.
Bank of America National Trust and Savings Association
Agency Administrative Services #5596
0000 Xxxxxxx Xxxx.
Xxxxxxx, XX 00000-0000
Attn: Xxxxxxx Xxxx
Ladies and Gentlemen:
The undersigned, U.S. Timberlands Klamath Falls, L.L.C. (the "Company"),
refers to the Credit Agreement, the terms defined therein being used herein as
therein defined, and hereby gives you notice irrevocably, pursuant to Section
2.3 of the Credit Agreement, of the Borrowing specified herein:
1. The aggregate amount of the proposed Borrowing (the "Proposed
Borrowing") to be comprised of [Acquisition Revolving Loans] [W/C Revolving
Loans] [a Swingline Loan] is $____________.
2. The Borrowing Date of the Proposed Borrowing is ____________________,
19___.
3. The Proposed Borrowing is to be comprised of $_______ of [Base Rate]
[Offshore Rate] Loans. [If applicable]: The duration of the Interest Period for
the Offshore Rate Loans included in the Proposed Borrowing shall be [1, 2, 3 or
6 month(s) except as specified in the definition of "Interest Period" contained
in the Credit Agreement].
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the proposed Borrowing before
and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Company contained in Article
VI of the Credit Agreement are true and correct as though made on and as of such
date (except to the extent such representations and warranties specifically
relate to an earlier date, in which case they were true and correct as of such
earlier date);
1
(b) no Default or Event of Default exists; and
[(c) [Applicable to Acquisition Revolving Loans:] the Proposed Borrowing
will not cause the aggregate Effective Amount of all outstanding Acquisition
Revolving Loans to exceed the aggregate Acquisition Revolving Commitments.]
or
[(c) [Applicable to W/C Revolving loans and Swingline Loans:] the Proposed
Borrowing will not cause the aggregate Effective Amount of all W/C Revolving
Loans, Swingline Loans and L/C Obligations to exceed the aggregate W/C Revolving
Commitments.]
U.S. TIMBERLANDS KLAMATH FALLS, L.L.C.
By: U.S. TIMBERLANDS SERVICES COMPANY,
L.L.C., its Managing Member
By:____________________________
Name:
Title:
2
Exhibit B
FORM OF NOTICE OF CONVERSION/CONTINUATION
Date: __________________
To: Bank of America National Trust and Savings Association, as Agent for the
Banks parties to the Credit Agreement dated as of November 19, 1997 (as
extended, renewed, amended or restated from time to time, the "Credit
------
Agreement") among U.S. Timberlands Klamath Falls, L.L.C., certain Banks
that are signatories thereto, and Bank of America National Trust and
Savings Association, as Issuing Bank, as Swingline Bank and as Agent for
and on behalf of each of the Banks.
Bank of America National Trust and Savings Association
Agency Administrative Services #5596
000 Xxxxxxx Xxxx.
Xxxxxxx, XX 00000-0000
Attn: Xxxxxxx Xxxx
Ladies and Gentlemen:
The undersigned, U.S. Timberlands Klamath Falls, L.L.C. (the "Company"),
-------
refers to the Credit Agreement, the terms defined therein being used herein as
therein defined, and hereby give you notice irrevocably, pursuant to Section 2.4
of the Credit Agreement, of the [conversion] [continuation] of the Loans
specified herein, that:
1. The date of the [conversion] [continuation] is _________________,
19__.
2. The aggregate amount of the Loans to be [converted] [continued] is
$____________.
3. The Loans are to be [converted into] [Base Rate] [Offshore Rate] or
[continued as] Offshore Rate Loans.
4. [If applicable:] The duration of the Interest Period for the Offshore
Rate Loans included in the [conversion] [continuation] shall be [1, 2, 3 or 6
month(s) except as specified in the definition of "Interest Period" contained in
the Credit Agreement].
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the proposed [conversion]
[continuation], before and after giving effect thereto and to the application of
the proceeds therefrom:
(a) [Include if conversion/continuation is into/as an Offshore Rate
Loan] the representations and warranties of the Company contained in Article VI
of
1
the Credit Agreement are true and correct as though made on and as of such
date (except to the extent such representations and warranties specifically
relate to an earlier date, in which case they were true and correct as of such
earlier date); and
(b) no Default or Event of Default exists.
U.S. TIMBERLANDS KLAMATH FALLS, L.L.C.
By: U.S. TIMBERLANDS SERVICES COMPANY,
L.L.C., its Managing Member
By:____________________________
Name:
Title:
2
Exhibit C
U.S. TIMBERLANDS KLAMATH FALLS, L.L.C.
FORM OF COMPLIANCE CERTIFICATE
Date: _________________________
Reference is made to the Credit Agreement, dated as of November 19, 1997
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement"; capitalized terms used herein and not
----------------
otherwise defined having the meanings assigned in the Credit Agreement), among
U.S Timberlands Klamath Falls, L.L.C., a Delaware limited liability company (the
"Company"), the several financial institutions from time to time party thereto
-------
(the "Banks"), and Bank of America National Trust and Savings Association, as
-----
Issuing Bank, as Swingline Bank and as agent for the Banks (in such last
capacity, the "Agent").
-----
The undersigned, a Responsible Officer of the Company, and acting on behalf
of the Company, hereby certifies on behalf of the Company as of the date hereof
that [he][she] is the ________________________ of the Company, and is duly
authorized to execute and deliver this Certificate to the Banks and the Agent on
behalf of the Company, and that:
1. Attached as Schedule 1 hereto are true and correct copies of the
----------
[unaudited] [audited] consolidated balance sheets of the Company and its
Subsidiaries and the MLP and its Subsidiaries, respectively, as at the end of
the fiscal [quarter] [year] ending _______, _____, and the related consolidated
statements of income, members' equity, and cash flows of the Company and its
Subsidiaries for such fiscal [quarter] [year], [(in the case of financial
statements, as at the end of any fiscal year setting forth in each case, in
comparative form the figures for the corresponding periods of the previous
fiscal year).] Such financial statements (i) present fairly in accordance with
GAAP (subject in the case of quarterly financial statements to the absence of
footnotes and ordinary year-end audit adjustments) the financial position of the
Company and its Subsidiaries as of the dates indicated and the results of their
operations, (ii) have been prepared in accordance with GAAP, subject to the
absence of footnotes and changes resulting from audit and normal year-end
audit(s).
2. The undersigned has reviewed and is familiar with the terms of the
Credit Agreement and has made, or has caused to be made under [his][her]
supervision, a review of the transactions and conditions (financial or
otherwise) of the Company and its Subsidiaries, during the accounting period
covered by the attached financial statements sufficient in [his][her] opinion to
be able to provide [his][her] certification.
3. To the best of the undersigned's knowledge, no Default or Event of
Default exists.
1
4. The financial covenant analyses and information set forth on Schedule
--------
2 attached hereto are true and accurate on and as of the date of this
-
Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on behalf
of the Company as of _______________ __, ____.
U.S. TIMBERLANDS KLAMATH FALLS, L.L.C.
By:____________________________________________________
Title:_________________________________________________
2
Date: __________________
For the fiscal [quarter][year]
ended _________ ___, ____
SCHEDULE 2*
to the Compliance Certificate
($ in 000's)
-------------------------------------------------------------------------------------------------------------------------
I. SECTION 8.14: MINIMUM PRO FORMA EBITDDA TO PRO FORMA INTEREST EXPENSE
-------------------------------------------------------------------------------------------------------------------------
(A) Pro Forma EBITDDA
-------------------------------------------------------------------------------------------------------------------------
(1) EBITDDA
-------------------------------------------------------------------------------------------------------------------------
(a) Net Income $_________
-------------------------------------------------------------------------------------------------------------------------
(b) Expenses for depreciation and amortization of
intangibles to the extent included in the
determination of Net Income $_________
-------------------------------------------------------------------------------------------------------------------------
(c) Expenses for the depletion of Timber from the
Timberlands to the extent included in the
determination of Net Income $_________
-------------------------------------------------------------------------------------------------------------------------
_____________________
* Due to space constraints, this Schedule is not inclusive of some detail
contained in the Credit Agreement. In all instances in which this Schedule is
inconsistent with the Credit Agreement, the Credit Agreement will prevail.
1
-------------------------------------------------------------------------------------------------------------------------
(d) Net Interest Expense
-------------------------------------------------------------------------------------------------------------------------
(i) Gross Interest Expense (cash interest expense
for the period, including all commissions,
discounts, fees and other charges under letters of
credit and similar instruments and under any Swap
Contract) $__________
-------------------------------------------------------------------------------------------------------------------------
(ii) Interest income for the period, and Swap
Contract payments received $__________
(iii) Sum of (i) minus (ii) $__________
(e) Nonrecurring non-cash charges $__________
-------------------------------------------------------------------------------------------------------------------------
(f) Net Proceeds from sales of assets permitted
under Section 8.2 (not in excess of the Maximum
Amount for any calendar year) $__________
-------------------------------------------------------------------------------------------------------------------------
(g) sum of (a) plus (b) plus (c) plus (d)(iii) plus
(e) plus (f) $__________
-------------------------------------------------------------------------------------------------------------------------
2
-------------------------------------------------------------------------------------------------------------------------
(2) [If applicable] In connection with
any timberlands to be acquired by
the Company with the proceeds of an
Acquisition Revolving Loan or
previously acquired within such
four fiscal quarters, an amount
equal to a good faith estimate of
such additional amounts that would
be included in EBITDDA had such
timberlands been owned by the
Company for such four fiscal
quarters, based upon good faith
estimates of applicable revenues
and expenses arising from such
timberlands and assuming aggregate
Timber Harvest in an amount that
does not require proceeds to be
placed in an escrow or cash
collateral account pursuant to
Section 8.20 $__________
-------------------------------------------------------------------------------------------------------------------------
(3) The sum of (1) plus/minus (as
applicable) (2) $__________
-------------------------------------------------------------------------------------------------------------------------
(B) Pro Forma Interest Expense
-------------------------------------------------------------------------------------------------------------------------
(1) Interest expense payable
on all Indebtedness $____________
-------------------------------------------------------------------------------------------------------------------------
(2) Interest expense that would have
been payable during the preceeding
four fiscal quarters, based upon
the interest rate applicable on the
date specified above and giving
effect as of the beginning of such
period to (x) the incurrence of
such Indebtedness and (y) the
application of such Indebtedness to
the substantially concurrent
repayment of any other
Indebtedness, in respect of:
-------------------------------------------------------------------------------------------------------------------------
3
------------------------------------------------------------------------------------------------------------------------------------
(a) Indebtedness proposed to be incurred on the date hereof, including any $__________
Loan requested under the Credit Agreement or other Senior Debt
(b) Indebtedness incurred after the end of the preceeding four fiscal $__________
quarters and before the date hereof
(c) sum of (a) plus (b) $__________
------------------------------------------------------------------------------------------------------------------------------------
(3) sum of (1) plus (2)(c) $__________
------------------------------------------------------------------------------------------------------------------------------------
(C) Ratio of Pro Forma EBITDDA ((A)(3)) to Pro Forma Interest Expense ____:1.00
((B)(3))
(D) Minimum Pro Forma EBITDDA to Pro Forma Interest Expense (from Section ____:1.00
8.14)
------------------------------------------------------------------------------------------------------------------------------------
II. SECTION 8.15: MAXIMUM FUNDED DEBT TO PRO FORMA EBITDDA
------------------------------------------------------------------------------------------------------------------------------------
(A) Funded Debt
------------------------------------------------------------------------------------------------------------------------------------
(1) Indebtedness of the type described in clauses (a), (b), (d) or (e) of $__________
definition thereof, excluding deferred purchase price of property with
limited recourse
------------------------------------------------------------------------------------------------------------------------------------
(2) [If applicable] In connection with any timberlands to be acquired with $__________
the proceeds of an Acquisition Revolving Loan, Indebtedness proposed to be
incurred in connection with such acquisition, including such Acquisition
Revolving Loan
------------------------------------------------------------------------------------------------------------------------------------
(3) Cash and Cash Equivalents $__________
------------------------------------------------------------------------------------------------------------------------------------
(4) Sum of (1) plus (2) minus (3) $__________
------------------------------------------------------------------------------------------------------------------------------------
4
---------------------------
(B) Pro Forma EBITDDA (from (I)(A)(3)) $__________
------------------------------------------------------------------------------------------------------------------------------------
(C) Ratio of Funded Debt ((A)(4)) to Pro Forma EBITDDA ((B)) ____:1.00
------------------------------------------------------------------------------------------------------------------------------------
(D) Maximum Funded Debt to Pro Forma EBITDDA (from Section 8.15) ____:1.00
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
III. SECTION 8.16 MINIMUM ASSET VALUE TO FUNDED DEBT RATIO
------------------------------------------------------------------------------------------------------------------------------------
(A) Asset Value
------------------------------------------------------------------------------------------------------------------------------------
(1) 70% of the Retail Timberlands Value, as $__________
reflected in the Quarterly/Annual Timber Report for
the fiscal quarter/fiscal year ended in the date
specified above
------------------------------------------------------------------------------------------------------------------------------------
(B) Funded Debt (from (II)(A)(3)) $__________
------------------------------------------------------------------------------------------------------------------------------------
(C) Ratio of Asset Value ((A)(1)) to Funded Debt ((B)) ____:1.00
------------------------------------------------------------------------------------------------------------------------------------
(D) Minimum Asset Value to Funded Debt Ratio (from Section 8.16) 1.75:1.00
------------------------------------------------------------------------------------------------------------------------------------
IV. RECONCILIATION OF QUARTERLY TIMBER REPORTS TO ANNUAL TIMBER REPORT
(FOURTH QUARTER ONLY)
------------------------------------------------------------------------------------------------------------------------------------
(A) Merchant Table Timber Inventory reported in most recent Quarterly _______ MBF
Timber Report (by volume and species)
------------------------------------------------------------------------------------------------------------------------------------
(B) Merchant Table Timer Inventory reported in Annual Timber Report (by _______ MBF
volume and species)
------------------------------------------------------------------------------------------------------------------------------------
5
Exhibit D
Form of Legal Opinion of Company's Counsel
November 19, 0000
Xxxx xx Xxxxxxx National Trust and Savings Association,
as Agent and as the Letter of Credit Issuing Bank, and
each of the Banks from time to time
parties to the Credit Agreement referred to below
c/o Bank of America National Trust and Savings Association
Agency Management Services #5596
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Re: U.S. Timberlands Klamath Falls, L.L.C.
Ladies and Gentlemen:
We have acted as special counsel to U.S. Timberlands Klamath Falls, L.L.C.,
a Delaware limited liability company (the "Company"), and U.S. Timberlands
Finance Corp., a Delaware corporation ("Finance"), in connection with the Credit
Agreement, dated as of November 19, 1997 (the "Credit Agreement"), among the
Company, the several financial institutions from time to time parties thereto
(the "Banks"), and Bank of America National Trust and Savings Association, as
letter of credit issuing bank thereunder (in such capacity, the "Issuing Bank"),
and as agent for the Banks (in such capacity, the "Agent"). Unless otherwise
defined herein, terms defined in the Credit Agreement and used herein shall have
the meanings given to them in the Credit Agreement.
The opinions expressed below are furnished to you pursuant to Section
5.1(c) of the Credit Agreement at the request, and with the approval, of the
Company and Finance. With your permission, all assumptions and statements of
reliance herein have been made without any independent investigation or
verification on our part except to the extent otherwise expressly stated, and we
express no opinion with respect to the subject matter or accuracy of such
assumptions or items relied upon, except to the extent otherwise expressly
stated.
In connection with this opinion, we have (i) investigated such questions of
law, (ii) examined originals or certified, conformed or reproduction copies of
such agreements, instruments, documents and records of the Company, the Managing
Bank of America National Trust and Savings
Association, as Agent, the Issuing Bank and the Banks
November 19, 1997
Page Two
Member and Finance, such certificates of public officials and other documents,
and (iii) received such information from officers and representatives of the
Company, the Managing Member and Finance, and from others, as we have deemed
necessary or appropriate for the purposes of this opinion. We have examined,
among other documents, executed copies of the Credit Agreement, including the
respective forms of promissory note annexed thereto as Exhibits F-1 and F-2.
In rendering the opinions hereinbelow expressed, we have assumed the legal
capacity of all natural persons executing documents (whether in an individual or
in a representative capacity), the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity to
authentic original documents of all documents submitted to us as certified,
conformed or reproduction copies. As to various questions of fact relevant to
such opinions, we have relied upon, and assume the accuracy of, representations
and warranties contained in the Credit Agreement and certificates and written
statements and other information of or from representatives of the Company, the
Managing Member and Finance, and from others, and assume compliance on the part
of all parties to the Credit Agreement with their covenants and agreements
contained therein.
In rendering such opinions, we have assumed that, except as to the matters
respecting the Company, Finance, and the Managing Member, and such other
matters, as are the subjects of our opinions in paragraphs 1-5 below or our
opinions referred to in the last sentence of this letter:
(i) each party to the Credit Agreement and to the operating agreement of
the Company (the "Operating Agreement"), is duly organized or
formed, validly existing and in good standing under the laws of its
jurisdiction of organization;
(ii) each party to the Credit Agreement and the Operating Agreement has
full power and authority and has obtained all requisite
authorizations, consents and approvals and made all requisite
filings and registrations, necessary to execute, deliver and perform
its obligations under such document;
(iii) the execution, delivery and performance of the Credit Agreement and
the Operating Agreement will not violate any law, rule, regulation,
order, decree or judgment binding upon or applicable to any party
thereto or its respective properties;
Bank of America National Trust and Savings
Association, as Agent, the Issuing Bank and the Banks
November 19, 1997
Page Three
(iv) the Credit Agreement and the Operating Agreement have been duly
authorized, executed and delivered by all parties thereto;
(v) all signatories to the Credit Agreement and the Operating Agreement
on behalf of the parties thereto have been duly authorized; and
(vi) the Credit Agreement and Operating Agreement constitute the legal,
valid and binding obligations of all Persons parties thereto,
enforceable against such Persons in accordance with their respective
terms.
Based upon and subject to the foregoing, and subject also to the
qualifications, limitations, exceptions and further assumptions hereinbelow set
forth, we are of the opinion that:
1. The Company is a limited liability company duly formed and validly
existing in good standing under the Delaware Limited Liability Company Act, and
Finance is a corporation duly organized and validly existing in good standing
under the Delaware General Corporation Law. The Company is duly registered or
qualified as a foreign limited liability company for the transaction of business
under the laws of the State of Oregon.
2. The execution and delivery on behalf of the Company of the Credit
Agreement, the Notes and the L/C Related Documents, and the performance by the
Company of its obligations thereunder, have been duly authorized on behalf of
the Company by all requisite limited liability company action of the Managing
Member.
3. The Credit Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, and the Revolving Loans made today constitute, and upon the funding
thereof in accordance with the terms of the Credit Agreement, the Acquisition
Loans will constitute, the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with the terms of the Credit
Agreement.
4. (a) The Company has all requisite limited liability company power and
authority to execute, deliver and perform its obligations under the Credit
Agreement; and (b) no authorization, consent or approval of, or any filing or
registration with, any United States federal or New York State Governmental
Authority is necessary for such execution, delivery or performance, other than
(i) routine post-closing informational filings, and (ii) filings necessary to
release of record Liens granted to secure obligations under the Existing Credit
Agreement.
Bank of America National Trust and Savings
Association, as Agent, the Issuing Bank and the Banks
November 19, 1997
Page Four
5. The execution and delivery by the Company of the Credit Agreement, and
performance of its obligations thereunder, will not violate any United States
federal or New York State law, rule, regulation or, to the best of our
knowledge, any order, decree or judgment binding upon the Company.
* * *
The foregoing opinions are subject to the following comments and
qualifications:
A. Our opinions in paragraph 3 are subject to and may be limited by (1)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance,
fraudulent transfer or other similar laws relating to or affecting the rights of
creditors generally, and (2) general principles of equity (regardless of whether
considered in a proceeding in equity or at law), including, without limitation
(a) the possible unavailability of specific performance, injunctive relief or
any other equitable remedy, and (b) concepts of materiality, reasonableness,
good faith and fair dealing. Without limiting the generality of our
qualifications set forth directly above in this paragraph, we express no opinion
as to the applicability to, or effect upon, any obligations of the Company under
the Credit Agreement, or the opinions expressed herein, of Section 548 of the
Bankruptcy Code, Article 10 of the New York Debtor and Creditor Law, or any
other law dealing with fraudulent transfers or conveyances, or Section 547 of
the Bankruptcy Code.
B. We express no opinion herein with respect to the enforceability of
provisions of the Credit Agreement that (i) relate to rights of set-off; (ii)
purport to establish evidentiary standards for suits or proceedings to enforce
such document or otherwise, to establish certain determinations as conclusive,
or to establish or negate applicable rules of construction based upon
participation in negotiations or document preparation, or to permit the Agent or
any Bank to act in its sole discretion or to waive a right to a jury trial or
service of process or rights to notice, demands, defenses, counterclaims or
setoffs; (iii) relate to severability or separability; (iv) relate to
indemnification or reimbursement obligations to the extent any such provisions
would purport to require the Company to provide indemnification or reimbursement
in respect of the gross negligence, willful misconduct or unlawful behavior of
any Person; (v) purport to limit the liability of or exculpate any Person other
than the Company; (vi) contain any agreement to agree or purport to bind non-
parties or to bind the Company to control the actions of any Person other than
its Subsidiaries (including, without limitation, its partners); (vii) purport to
require that all amendments, waivers and terminations be in writing or to
require disregard of any course of dealing between the parties; (viii) purport
to confer subject matter jurisdiction in respect of bringing suit, enforcement
of judgments or otherwise on any court, to the extent that such court does
Bank of America National Trust and Savings
Association, as Agent, the Issuing Bank and the Banks
November 19, 1997
Page Five
not have such jurisdiction; (ix) purport to waive inconvenient forum or the
defense of illegality or to establish any obligation of the Company as
unconditional regardless of the occurrence or non-occurrence of any other event;
(x) purport to require the Company to pay costs and expenses pursuant to Section
11.4(b) to the extent costs and expenses are not reasonable; or (xi) purport to
waive notice of acceleration.
C. We express no opinion as to any provisions of the Credit Agreement
which purport to impose liability on the Company, or to relieve the Issuing Bank
from liability, in connection with the Issuing Bank's payment, or failure to
make payment, of draws under a letter of credit to the extent that such
provisions are inconsistent with any provision of Article 5 of the Uniform
Commercial Code as in effect in the State of New York or the Uniform Customs and
Practice for Documentary Credits (the "UCP"), which provisions of said Article
5, or of the UCP, as the case may be, may not under applicable law or the UCP be
varied by agreement.
D. We express no opinion as to the effect of the laws of any jurisdiction
in which any Bank is located (other than the State of New York) that limit the
interest, fees or other charges such Bank may impose.
E. Without limiting the generality of paragraph G below, we express no
opinion as to any Environmental Laws or as to any antitrust or other laws
regulating anti-competitive practices.
F. Our opinion in paragraph 3 above regard to Section 11.16(a) of the
Credit Agreement is based solely on Section 5-1401 of the New York General
Obligations Law.
G. The opinions herein expressed are limited to the matters expressly set
forth in this opinion letter, and no opinion is implied or may be inferred
beyond the matters expressly so stated.
H. The foregoing opinions are limited to matters involving (1) in the
case of paragraphs 1 (first sentence), 2 and 4(a), the Delaware Limited
Liability Company Act and, in the case of paragraph 1, the Delaware General
Corporation Law, or (2) in the case of paragraphs 3, 4(b) and 5, the laws of the
State of New York and the federal laws of the United States which, in our
experience, are normally applicable to transactions of this nature or parties of
similar character as the Company and, in the case of said paragraph 5, such
orders, decrees and judgments as have been identified to us by the Company as
applicable to the Company. Our opinion in the second sentence of paragraph 1
above is based solely upon a certificate of the Secretary of State of Oregon. We
do not express any opinion as to any other laws. Moreover, we do not express any
Bank of America National Trust and Savings
Association, as Agent, the Issuing Bank and the Banks
November 19, 1997
Page Six
opinion as to the various state and federal laws regulating the Agent or the
Banks (including the Issuing Bank) in the conduct of their respective businesses
that may relate to the Credit Agreement or any other Loan Document.
This opinion letter is provided to you by us in our capacity as special
counsel to the Company and Finance and may not be relied upon (i) by any Person
other than you and, as of its date, other Persons who shall become Banks under
the Credit Agreement, or (ii) by any Person for any purpose other than in
connection with the transactions contemplated by the Credit Agreement without,
in each instance, our prior written consent. This opinion letter speaks as of
its date and we undertake no, and hereby disclaim any, duty to advise you or any
other Person entitled to rely hereon as to changes of law or fact coming to our
attention after the delivery hereof on such date. You and each other Person
authorized to rely hereon, as specified in clause (i) of the first sentence of
this paragraph (subject in each case to be the limitations in clause (ii) of
such sentence), are hereby authorized to rely, as if addressed to you or such
Person, as the case may be, as of the date hereof and subject to all
assumptions, qualifications, limitations and exceptions therein contained, upon
our separate opinions of even date herewith addressed to the underwriters
parties to the underwriting agreements, each dated as of November 13, 1997, with
respect to (i) the Company's Senior Notes and (ii) the Common Units of U.S.
Timberlands Company, L.P.
Very truly yours,
Exhibit E
Form of Assignment and Acceptance
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance"), dated as of __________, _____, is made between
____________________ (the "Assignor") and ____________________ (the "Assignee").
RECITALS
--------
WHEREAS, the Assignor is party to the Credit Agreement dated as of November
19, 1997 (as the same may be extended, renewed, amended or restated from time to
time, the "Credit Agreement"), among U.S. TIMBERLANDS KLAMATH FALLS, L.L.C. (the
----------------
"Company"), the financial institutions from time to time party thereto
-------
(including the Assignor, the "Banks") and BANK OF AMERICA NATIONAL TRUST AND
-----
SAVINGS ASSOCIATION, as Issuing Bank, as Swingline Bank and as agent for the
Banks (in such last capacity, the "Agent"). Any terms defined in the Credit
-----
Agreement and not defined in this Assignment and Acceptance are used herein as
defined in the Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor has committed
to making (i) Acquisition Revolving Loans to the Company in an aggregate amount
not to exceed $__________ (the "Acquisition Revolving Commitment"), and (ii) W/C
--------------------------------
Revolving Loans, together with a Pro Rata Share of Swingline Loans and L/C
Obligations, to the Company in an aggregate amount not to exceed $__________
(the "W/C Revolving Commitment");
------------------------
WHEREAS, [the Effective Amount of all Acquisition Revolving Loans with
respect to the Assignor on the date hereof is $__________] [and] [the Effective
Amount of all W/C Revolving Loans with respect to the Assignor on the date
hereof is $__________] [and] [the Effective Amount of all Swingline Loans with
respect to the Assignor on the date hereof is $__________] [and] [the Effective
Amount of L/C Obligations with respect to the Assignor on the date hereof is
$__________] [no] [Acquisition Revolving Loans] [W/C Revolving Loans] [Swingline
Loans][or][Letters of Credit] are outstanding under the Credit Agreement];
[WHEREAS, the Assignor has acquired a participation in the Issuing Bank's
liability under Letters of Credit in an aggregate principal amount of
$__________ ] [and a participation in the Swingline Bank's liability under
Swingline Loans in an aggregate principal amount of $____________ ] [no Letters
of Credit are outstanding under the Credit Agreement] [no Swingline Loans are
outstanding under the Credit Agreement]; and ]
WHEREAS, the Assignor wishes to assign to the Assignee [a ratable portion
of the] [all] rights and obligations of the Assignor under the Credit Agreement
in respect of [(i)] [its Acquisition Revolving Commitment in an amount equal to
$__________, [together with a ratable portion of its outstanding Acquisition
Revolving Loans], (the "Assigned Acquisition Amount")] and [(ii)] its W/C
---------------------------
Revolving Commitment in an amount equal to $__________, [together with a ratable
portion of its outstanding W/C Revolving Loans, [applicable if the
1
Assignor has acquired a participation in Swingline Loans] Swingline Loans,
[[applicable if the Assignor has acquired a participation in the Issuing Bank's
liability under Letters of Credit:] and L/C Obligations](the "Assigned W/C
------------
Amount"), on the terms and subject to the conditions set forth herein, and the
------
Assignee wishes to accept assignment of such rights and to assume such
obligations from the Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
-------------------------
(a) Subject to the terms and conditions of this Assignment and Acceptance,
(i) the Assignor hereby sells, transfers and assigns to the Assignee, and (ii)
the Assignee hereby purchases, assumes and undertakes from the Assignor, without
recourse and without representation or warranty (except as provided in this
Assignment and Acceptance) (A) __% (the "Assignee's Percentage Share") of each
---------------------------
the Acquisition Revolving Commitment [and the corresponding Acquisition
Revolving Loans] and a ratable percentage of the W/C Revolving Commitment [and
the corresponding [W/C Revolving Loans][Swingline Loans][and] [L/C Obligations]]
of the Assignor, and (B) all related rights, benefits, obligations, liabilities
and indemnities of the Assignor under and in connection with the Credit
Agreement and the Loan Documents.
[If appropriate, add paragraph specifying payment to Assignor by Assignee
of outstanding principal of, accrued interest on, and fees with respect to,
Acquisition Revolving Loans, W/C Revolving Loans, Swingline Loans and L/C
Obligations assigned.]
(b) With effect on and after the Effective Date (as defined herein), the
Assignee shall be a party to the Credit Agreement and succeed to all of the
rights and be obligated to perform all of the obligations of a Bank under the
Credit Agreement, including the requirements concerning confidentiality and the
payment of indemnification, with an Acquisition Revolving Commitment in an
amount equal to the Assigned Acquisition Amount and a W/C Revolving Commitment
in an amount equal to the Assigned W/C Amount. The Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Credit Agreement are required to be performed by it as a Bank. It is the
intent of the parties hereto that (i) the Acquisition Revolving Commitment of
the Assignor shall, as of the Effective Date, be reduced by an amount equal to
the Assigned Acquisition Amount relating thereto, (ii) the W/C Revolving
Commitment of the Assignor shall, as of the Effective Date, be reduced by an
amount equal to the Assigned W/C Amount relating thereto, and (iii) the Assignor
shall relinquish its rights (except its rights with respect to indemnification
or compensation arising out of an event occurring before the Effective Date) and
be released from its obligations under the Credit Agreement to the extent such
obligations have been assumed by the Assignee.
(c) After giving effect to the assignment and assumption set forth herein,
on the Effective Date the Assignee's Acquisition Revolving Commitment will be
$__________ and the Assignee's W/C Revolving Commitment will be $__________.
2
(d) After giving effect to the assignment and assumption set forth herein,
on the Effective Date the Assignor's Acquisition Revolving Commitment will be
$__________ and the Assignor's W/C Revolving Commitment will be $__________.
2. Payments.
--------
(a) As consideration for the sale, assignment and transfer contemplated in
Section 1, the Assignee shall pay to the Assignor on the Effective Date in
immediately available funds an amount equal to the sum of (i) $__________,
representing the Assignee's Percentage Share of the principal amount of the
Acquisition Revolving Loans of the Assignor, plus (ii) $__________, representing
the Assignee's Percentage Share of the principal amount of the W/C Revolving
Loans of the Assignor.
(b) The [Assignor] [Assignee] further agrees to pay to the Agent a
processing fee in the amount specified in Section 11.8(a) of the Credit
Agreement.
3. Reallocation of Payments.
------------------------
Any interest, fees and other payments accrued to the Effective Date with
respect to the Acquisition Revolving Commitment [and the related Acquisition
Revolving Loans] , and the W/C Revolving Commitment [and the related W/C
Revolving Loans] [and the corresponding Swingline Loans and L/C Obligations]
shall be for the account of the Assignor. Any interest, fees and other payments
accrued on and after the Effective Date with respect to the Assigned Amount
shall be for the account of the Assignee. Each of the Assignor and the Assignee
agrees that it will hold in trust for the other party any interest, fees and
other amounts which it may receive to which the other party is entitled pursuant
to the preceding sentence and pay to the other party any such amounts which it
may receive promptly upon receipt.
4. Independent Credit Decision.
---------------------------
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements referred to in Section 7.1 of the Credit
Agreement, and such other documents and information as it has deemed appropriate
to make its own credit and legal analysis and decision to enter into this
Assignment and Acceptance; and (b) agrees that it will, independently and
without reliance upon the Assignor, the Agent or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit and legal decisions in taking or not taking
action under the Credit Agreement.
5. Effective Date; Notices.
-----------------------
(a) As between the Assignor and the Assignee, the effective date for this
Assignment and Acceptance shall be __________, ____ (the "Effective Date");
--------------
provided, that the following conditions precedent have been satisfied on or
--------
before the Effective Date:
3
(i) this Assignment and Acceptance shall be executed and delivered
by the Assignor and the Assignee;
(ii) the consents of the Company[, the Issuing Bank,] [,the
Swingline Bank] and the Agent, if required for an effective assignment of
the Assigned Acquisition Amount and the Assigned W/C Amount by the Assignor
to the Assignee under Section 11.8(a) of the Credit Agreement, shall have
been duly obtained and shall be in full force and effect as of the
Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts due to the
Assignor under this Assignment and Acceptance; and
(iv) the processing fee referred to in Section 2(b) hereof and in
Section 11.8(a) of the Credit Agreement shall have been paid to the Agent.
(b) Promptly following the execution of this Assignment and Acceptance,
the Assignor shall deliver to the Company [, the Issuing Bank,] [,the Swingline
Bank] and the Agent for acknowledgment by the Agent [and the Issuing Bank,]
[,the Swingline Bank] a Notice of Assignment in the form attached hereto as
Schedule 1.
6. Agent.
-----
(a) The Assignee hereby appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Agent by the Banks pursuant to the terms of
the Credit Agreement.
[(b) The Assignee shall assume no duties or obligations held by the
Assignor in its capacity as Agent under the Credit Agreement.] [INCLUDE ONLY IF
ASSIGNOR IS AGENT]
[(c) If the Assignor is an Issuing Bank or Swingline Bank, the Assignee
shall assume no duties or obligations held by the Assignor in its capacity as
such under the Credit Agreement or any other Loan Document.] [INCLUDE ONLY IF
ASSIGNOR IS ISSUING BANK OR SWINGLINE BANK]
7. Withholding Tax.
---------------
The Assignee (a) represents and warrants to the Agent and the Company that
under applicable law and treaties no tax will be required to be withheld by the
Assignor with respect to any payments to be made to the Assignee hereunder, (b)
agrees to furnish (if it is organized under the laws of any jurisdiction other
than the United States or any State thereof) to the Agent and the Company prior
to the time that the Agent or the Company is required to make any payment of
principal, interest or fees hereunder, duplicate executed originals of either
U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form
1001 (wherein the Assignee claims entitlement to the benefits of a tax treaty
that provides for a complete exemption from U.S. federal income withholding tax
on all payments hereunder) and agrees to provide new Forms 4224 or 1001 upon the
expiration of any previously delivered form or comparable
4
statements in accordance with applicable U.S. law and regulations and amendments
thereto, duly executed and completed by the Assignee, and (c) agrees to comply
with all applicable U.S. laws and regulations with regard to such withholding
tax exemption.
8. Representations and Warranties.
------------------------------
(a) The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any lien, security interest or other adverse
claim; (ii) it is duly organized and existing and it has the full power and
authority to take, and has taken, all action necessary to execute and deliver
this Assignment and Acceptance and any other documents required or permitted to
be executed or delivered by it in connection with this Assignment and Acceptance
and to fulfill its obligations hereunder; (iii) no notices to, or consents,
authorizations or approvals of, any person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to, or
filing with, any person is required of it for such execution, delivery or
performance; and (iv) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignor, enforceable against the Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements
of the Company, or the performance or observance by the Company, of any of its
respective obligations under the Credit Agreement or any other instrument or
document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly organized and
existing and it has full power and authority to take, and has taken, all action
necessary to execute and deliver this Assignment and Acceptance and any other
documents required or permitted to be executed or delivered by it in connection
with this Assignment and Acceptance, and to fulfill its obligations hereunder;
(ii) no notices to, or consents, authorizations or approvals of, any person are
required (other than any already given or obtained) for its due execution,
delivery and performance of this Assignment and Acceptance; and apart from any
agreements or undertakings or filings required by the Credit Agreement, no
further action by, or notice to, or filing with, any person is required of it
for such execution, delivery or performance; (iii) this Assignment and
Acceptance has been duly executed and delivered by it and constitutes the legal,
valid and binding obligation of the Assignee, enforceable against the Assignee
in accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors' rights and to general equitable principles;
and (iv) it is an Eligible Assignee.
5
9. Further Assurances.
------------------
The Assignor and the Assignee each hereby agrees to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Company or the Agent, which may be required in
connection with the assignment and assumption contemplated hereby.
10. Miscellaneous.
-------------
(a) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation,
execution and performance of this Assignment and Acceptance.
(d) This Assignment shall be null and void if not undertaken on a pro rata
basis between the Assignor's Acquisition Revolving Commitment
[together with a ratable portion of its outstanding Acquisition
Revolving Loans] and its W/C Revolving Commitment [together with a
ratable portion of its outstanding W/C Revolving Loans, Swingline
Loans and L/C Obligations].
(e) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
(f) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED THAT THE
--------
AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS ASSIGNMENT AND
ACCEPTANCE MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXXX XXX XXXXX XX XXX
XXXX, THE COURTS OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF THE
STATE OF NEW YORK, THE COURTS OF THE STATE OF CALIFORNIA OR OF THE
UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY
EXECUTION AND DELIVERY OF THIS ASSIGNMENT AND ACCEPTANCE, EACH OF THE
ASSIGNOR AND THE ASSIGNEE CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF
THE ASSIGNOR AND THE ASSIGNEE IRREVOCABLY WAIVES ANY
6
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
--------------------
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS ASSIGNMENT AND ACCEPTANCE. THE ASSIGNOR AND THE
ASSIGNEE EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
CALIFORNIA LAW.
(g) THE ASSIGNEE WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
ASSIGNMENT AND ACCEPTANCE OR THE TRANSACTIONS CONTEMPLATED HEREBY IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY THE
ASSIGNOR, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. THE ASSIGNEE AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION
SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, ASSIGNEE FURTHER AGREES THAT ITS RIGHT TO A TRIAL BY JURY
IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM
OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE
VALIDITY OR ENFORCEABILITY OF THIS ASSIGNMENT AND ACCEPTANCE OR ANY
PROVISION CONTAINED HEREIN. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS ASSIGNMENT
AND ACCEPTANCE.
[Other provisions to be added as may be negotiated between the Assignor and
the Assignee, provided that such provisions are not inconsistent with the Credit
Agreement.]
7
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[Name of Assignor]
By:_____________________________________
Title:
Address:
[Name of Assignee]
By:_____________________________________
Title:
Address:
8
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
-----------------------------------
Date: _______________________
Bank of America National
Trust and Savings Association, as Agent [ Issuing Bank and Swingline Bank]
Paper and Forest Products #9973
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxx, Managing Director
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
U.S Timberlands Klamath Falls, L.L.C.
X.X. Xxx 00
0000 Xxxxxxx 00
Xxxxxxx Xxxxx, Xxxxxx 00000
Ladies and Gentlemen:
We refer to the Credit Agreement, dated as of November 19, 1997 (as the
same may be extended, renewed, amended or restated from time to time, the
"Credit Agreement"), among U.S. Timberlands Klamath Falls, L.L.C. (the
----------------
"Company"), the financial institutions party thereto (the "Banks") and Bank of
------- -----
America National Trust and Savings Association, as Issuing Bank, as Swingline
Bank and as agent for the Banks (in such last capacity, the "Agent"). Terms
-----
defined in the Credit Agreement are used herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by _______________ (the "Assignor") to _______________ (the
"Assignee") of _____% of the right, title and interest of the Assignor in and to
--------
the Acquisition Commitment of the Assignor[, and all outstanding Acquisition
Revolving Loans under the Credit Agreement], made by the Assignor pursuant to
the Assignment and Acceptance Agreement attached hereto (the "Assignment and
----------
Acceptance"). Before giving effect to such assignment, the Assignor's
----------
Acquisition Revolving Commitment is $__________ [and the aggregate amount of its
outstanding Acquisition Revolving Loans is $__________.] Additionally, we hereby
give you notice of, and request your consent to, the assignment by the Assignor
to the Assignee of a ratable percentage of the right, title and interest of the
Assignor in and to the W/C Revolving Commitment of the Assignor [and all
outstanding W/C Revolving Loans, Swingline Loans and L/C Obligations] under the
Credit Agreement, made by the Assignor pursuant to the Assignment and Acceptance
Agreement attached hereto (the "Assignment and Acceptance"). Before giving
-------------------------
9
effect to such assignment, the Assignor's W/C Revolving Commitment is
$__________ and the aggregate amount of its outstanding W/C Revolving Loans is
$__________[, the Effective Amount of the Assignor's Swingline Loans is
$_________ and the Effective Amount of the Assignor's L/C Obligations is
$__________].
2. The Assignee agrees that, upon receiving the consent of the Agent, the
Issuing Bank, the Swingline Bank and, if applicable, the Company, to such
assignment, the Assignee will be bound by the terms of the Credit Agreement as
fully and to the same extent as if the Assignee were the Bank originally holding
such interest in the Credit Agreement.
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name: ____________________________
Address: ____________________________
____________________________
____________________________
Attention: ____________________________
Telephone: (___) ____________________________
Telecopier: (___) ____________________________
Telex (Answerback): ____________________________
(B) Payment Instructions:
Account No.: ____________________________
At: ____________________________
____________________________
____________________________
Reference: ____________________________
Attention: ____________________________
4. You are entitled to rely upon the representations, warranties and
covenants of each of the Assignor and Assignee contained in the Assignment and
Acceptance.
10
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice
of Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above written.
Very truly yours,
[Name of Assignor]
By:__________________________________
Name:
Title:
[Name of Assignee]
By:__________________________________
Name:
Title:
11
Exhibit F-1
FORM OF ACQUISITION REVOLVING NOTE
U.S. $_________
FOR VALUE RECEIVED, U.S Timberlands Klamath Falls, L.L.C. (the "Borrower")
--------
hereby promises to pay to the order of ___________________________ (the "Bank")
----
the principal amount of ________________________ ($___________) or, if less, the
aggregate unpaid principal amount of all Acquisition Revolving Loans made by the
Bank from time to time to the Borrower pursuant to the Credit Agreement
described below, at the times and in the amounts specified in the Credit
Agreement. The Borrower promises to pay interest on such unpaid principal amount
at the times and at the rates specified in the Credit Agreement.
This Note is one of the Notes referred to in, and is issued under, the
Credit Agreement, dated as of November 19, 1997 (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the "Credit
------
Agreement"), among the Borrower, the financial institutions party thereto (the
---------
"Banks"), and Bank of America National Trust and Savings Association, as Issuing
-----
Bank, as Swingline Bank and as agent for the Banks (in such last capacity, the
"Agent").
-----
The holder of this Note is authorized to record on the schedule
annexed hereto the date, amount, maturity and type of, and, in the case of
Offshore Rate Loans, the Interest Period with respect to each Acquisition
Revolving Loan made by it and the amount of each payment of principal made by
the Borrower with respect thereto. Any such recordation shall be conclusive
absent manifest error; provided, however, that the failure of the holder of this
-------- -------
Acquisition Revolving Note to make, or an error in making, a notation thereon
with respect to any Acquisition Revolving Loan shall not limit or otherwise
affect the obligations of the Borrower hereunder or under the Credit Agreement.
The holder of this Acquisition Revolving Note shall be entitled to the
benefits provided for in the Credit Agreement. Reference is hereby made to the
Credit Agreement for provisions concerning (i) the obligation of the Bank to
advance funds evidenced by this Acquisition Revolving Note, (ii) the manner in
which interest is computed and accrued, (iii) the Borrower's rights, if any, to
prepay all or part of the Acquisition Revolving Loans, (iv) the events upon
which the maturity of the principal of and accrued interest on this Acquisition
Revolving Note may be accelerated or shall be automatically accelerated, as the
case may be, (v) the manner in which Acquisition Revolving Loans may be
converted from one Type into another Type to the extent provided in the Credit
Agreement, (vi) attorney's fees and other fees and expenses incurred in any
enforcement of this Acquisition Revolving Note, (vii) the Borrower's right to
cure certain Events of Default, and (viii) the Bank's rights to assign all or
part of this Acquisition Revolving Note to Assignees and/or to sell
participating interests in any Acquisition Revolving Loans, as more fully set
forth in the Credit Agreement. Capitalized terms used herein and not otherwise
defined shall have the meanings assigned in the Credit Agreement.
1
Principal and interest are payable in lawful money of the United States of
America in immediately available funds to Bank of America National Trust and
Savings Association, as Agent for the Bank, at the Agent's Payment Office
described in the Credit Agreement.
The Borrower hereby waives presentment, demand, protest or other notice of
any kind. No failure to exercise, and no delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
THIS ACQUISITION Revolving NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
---------------------------------------------------------------------
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT THE
------------------------------------------------------------------------------
AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
---------------------------------------------------------------------
IN WITNESS WHEREOF, the Borrower has caused this Acquisition Revolving Note
to be executed by its officer thereunto duly authorized.
U.S. TIMBERLANDS KLAMATH FALLS, L.L.C.
By: U.S. Timberlands Services Company, L.L.C.,
its Managing Member
By:_______________________________________________
Name:
Title:
2
SCHEDULE
Date Loan Amount Type Interest Principal Date Principal
Disbursed of Loan of Loan Period Payment Paid
--------- ------- ------- ------ ------- ----
3
Exhibit F-2
FORM OF W/C REVOLVING NOTE
U.S. $_______________ __________, _______
FOR VALUE RECEIVED, U.S. Timberlands Klamath Falls, L.L.C. (the "Borrower")
--------
hereby promises to pay to the order of ___________________________ (the "Bank")
----
the principal amount of __________________________ ($________________) or, if
less, the aggregate unpaid principal amount of all W/C Revolving Loans made by
the Bank from time to time to the Borrower pursuant to the Credit Agreement
described below and the Bank's Pro Rata Share of the L/C Obligations under the
Credit Agreement, at the times and in the amounts specified in the Credit
Agreement. The Borrower promises to pay interest on such unpaid principal amount
at the times and at the rates specified in the Credit Agreement.
This Note is one of the Notes referred to in, and is issued under, the
Credit Agreement, dated as of November 19, 1997 (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the "Credit
------
Agreement"), among the Borrower, the financial institutions party thereto (the
---------
"Banks"), and Bank of America National Trust and Savings Association, as Issuing
-----
Bank, as Swingline Bank and as agent for the Banks (in such last capacity, the
"Agent").
-----
The holder of this Note is authorized to record on the schedule annexed
hereto the date, amount, maturity and type of, and, in the case of Offshore Rate
Loans, the Interest Period with respect to each W/C Revolving Loan made by it
and its Pro Rata Share of each L/C Obligation, and the amount of each payment of
principal made by the Borrower with respect thereto. Any such recordation shall
be conclusive absent manifest error; provided, however, that the failure of the
-------- -------
holder of this W/C Revolving Note to make, or an error in making, a notation
thereon with respect to any W/C Revolving Loan shall not limit or otherwise
affect the obligations of the Borrower hereunder or under the Credit Agreement.
The holder of this W/C Revolving Note shall be entitled to the benefits
provided for in the Credit Agreement. Reference is hereby made to the Credit
Agreement for provisions concerning (i) the obligation of the Bank to advance
funds evidenced by this W/C Revolving Note, (ii) the manner in which interest is
computed and accrued, (iii) the Borrower's rights, if any, to prepay all or part
of the W/C Revolving Loans, (iv) the events upon which the maturity of the
principal of and accrued interest on this W/C Revolving Note may be accelerated
or shall be automatically accelerated, as the case may be, (v) the manner in
which W/C Revolving Loans may be converted from one Type into another Type to
the extent provided in the Credit Agreement, (vi) attorney's fees and other fees
and expenses incurred in any enforcement of this W/C Revolving Note, (vii) the
Borrower's right to cure certain Events of Default, and (viii) the Bank's rights
to assign all or part of this W/C Revolving Note to Assignees and/or to sell
participating interests in any W/C Revolving Loans or L/C Obligations, as more
fully set forth in the Credit Agreement. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned in the Credit Agreement.
1
Principal and interest are payable in lawful money of the United States of
America in immediately available funds to Bank of America National Trust and
Savings Association, as Agent for the Bank, at the Agent's Payment Office
described in the Credit Agreement.
The Borrower hereby waives presentment, demand, protest or other notice of
any kind. No failure to exercise, and no delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
THIS W/C REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
------------------------------------------------------------------------
WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT THE AGENT AND
-----------------------------------------------------------------------------
THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
-----------------------------------------------------------
IN WITNESS WHEREOF, the Borrower has caused this W/C Revolving Note to be
executed by its officer thereunto duly authorized.
U.S. TIMBERLANDS KLAMATH FALLS, L.L.C.
By: U.S. Timberlands Services Company, L.L.C.,
its Managing Member
By:______________________________________________
Name:
Title:
2
SCHEDULE
Date Loan Amount Type Interest Principal Date Principal
Disbursed of Loan of Loan Period Payment Paid
--------- ------- ------- ------ ------- ------------
3
EXHIBIT G
INITIAL TIMBER REPORT
[LETTERHEAD OF XXXXX XXXXX & XXXXXX Inc APPEARS HERE]
Xx. Xxxx Xxxxx
Bank of America
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Fax (000)000-0000
Dear Xxxx:
We are enclosing information on timber pricing for the northeastern portion
of California, the area known as TVA-6. Enclosed you will find a copy of the
most recent report from the California State Board of Equalization, and in
addition you will find our summary of the past several years pricing movement
as well as a graph reflecting the tabular data.
When Xxxx Xxxxxxxx called and asked about using the State Board of
Equalization materials as an index, I agreed that it would work fine in a long-
term situation. It only changes twice per year and historically hasn't made
dramatic movements. The data is, however, historic and reflects information
available to the state board staff for the 18 months prior to the date of
reporting. It therefore, does not usually reflect the immediate market
situation. In an up trending market, it is likely to be lower than the actual
prices, and in a down trending market, it is likely to be above the actual
prices, Specifically, the pricing is for young growth timber, and because of the
nature of the logs that move in the market, it reflects the trees sold at any
one time. Therefore, if the bulk of the data available to the staff was for poor
quality at any one time, it is likely the prices would be lower than appropriate
for high quality timber. However, with the foregoing caveats, it is probably the
best long-term trend indicator available from public data at this time.
Very truly yours,
/s/ Xxxx X. Xxxx
Xxxx X. Xxxx
GAZ:Imd
Attachments: State of California Board of Equalization reported prices for
July through December, 1997 Xxxxx, Xxxxx & Xxxxxx, Inc.
tabulation of historic price data from SB reports Graphical
analysis of the tabular data.
c: Xxxx Xxxxxxxx, Fax(541)000-0000
State Board of Equalization
Timber Value Area 6
PP SP WF DF IC LP MB&G Est.
---------------------------------------------------------------
Apr-77 75 75 60 80 75 45
Jan-78 104 81 96 100 88 62
Jul-78 125 110 95 100 86 75
Jan-79 120 120 90 135 100 72
Jul-79 150 150 90 125 135 90
Jan-80 125 125 110 125 140 75
Jul-80 115 115 85 85 95 69
Jan-81 90 90 85 85 95 54
Jul-81 105 105 85 85 60 63
Jan-82 120 120 70 90 90 72
Jul-82 70 80 25 80 50 42
Jan-83 60 70 30 60 40 36
Jul-83 80 90 50 90 55 48
Jan-84 80 90 50 90 60 48
Jul-84 100 100 60 100 80 60
Jan-85 70 60 35 70 80 42
Jul-85 75 60 35 70 75 45
Jan-86 80 70 40 70 60 48
Jul-86 85 85 45 60 50 51
Jan-87 90 90 50 70 60 54
Jul-87 115 115 60 75 90 69
Jan-88 140 120 70 85 100 84
Jul-88 160 160 80 90 100 96
Jan-89 170 170 90 110 100 102
Jul-89 210 210 110 130 110 126
Jan-90 235 235 150 185 130 141
Jul-90 250 250 180 230 150 150
Jan-91 200 200 160 200 150 120
Jul-91 180 180 140 180 140 108
Jan-92 220 220 170 230 150 132
Jul-92 380 380 250 400 220 228
Jan-93 360 360 225 350 250 216
Jul-93 600 600 370 490 300 360
Jan-94 400 400 350 450 300 240
Jul-94 470 470 380 500 300 282
Jan-95 400 400 320 450 250 240
Jul-95 490 490 360 460 270 294
Jan-96 490 490 400 500 300 294
Jul-96 470 470 380 460 300 282
Jan-97 430 430 380 470 320 258
Jul-97 400 400 390 460 340 240
[LINE GRAPH PLOTTING STUMPAGE SALES APPEARS HERE]
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
XXXXXXXXXX XXXXX BOARD OF EQUALIZATION
TIMBER VALUE AREAS
Prepared by: Tax Area Services-Geographic Information Centre
================================================================================
[MAP OF CALIFORNIA COUNTY BOUNDARIES APPEARS HERE]
CALIFORNIA STATE BOARD OF EQUALIZATION
HARVEST VALUE SCHEDULES, EFFECTIVE JULY 1 THROUGH DECEMBER 31, 1997
NOT FINAL VALUES
TABLE 1, MISCELLANEOUS HARVEST VALUES - This table is applicable to all timber
value areas and shows the harvest values for special items such as Christmas
trees, fuelwood, chipwood, poles, posts, split products, small sawlogs, and cull
logs. Small sawlogs are logs of any species where the average net volume per
16-ft log for all sawlogs removed from a timber harvest operation during the
reporting quarter is less than 65 board feet, Xxxxxxxx Short Log Scale. Cull
logs are to be reported in adjusted gross M board feet. For cull logs measured
in tons, use a conversion factor of 4 tons per gross MBF, Xxxxxxxx scale. Except
for split products and small sawlogs, the items in this table are to be reported
in the column for other unit measure on the Timber Tax Harvest Report.
TABLE 2, SIZE-QUALITY RATING FOR OLD GROWTH - This table shows the log sizes
used to rate the listed species of old growth timber. The taxpayer determines
the appropriate size-quality code as 1, 2 or 3 based upon the average net volume
per 16' log. The average volume per log is for the reported quarterly-volume
within the harvest operation. It is calculated by dividing the net volume by
the actual number of short-log scaling segments. (An estimate of the number of
sealing segments may be made by dividing the total linear feet by 16.) Cull logs
are excluded from this determination. When size quality code determined from a
statistical sample such as a timber cruise, calculate the code by dividing the
total net volume of old growth on that species by the number of 16 foot old
growth logs for that species for the entire sale. This rating shall remain fixed
for the life of the timber operation.
TABLE 0, XXX XXXXXX XXXXXXX VALUES - This table shows the harvest values for
such timber by species, size-quality if required, and timber value area. The
taxpayer must make the adjustments for the logging system and for small total
volume on the harvest operation and/or low average volume per acre on the
harvest operation and country location if the operation qualifies.
TABLE 4, YOUNG GROWTH HARVEST VALUES - This table shows the harvest values for
such timber by species and timber value area. The taxpayer must make the
adjustments for the logging system and for small total volume on the harvest
operation and/or low average volume per acre on the harvest operation and county
location if the operation qualifies.
TABLE 5, SALVAGE OLD GROWTH HARVEST VALUES - This table shows the harvest values
for such timber removed by salvage logging only. Table shows the harvest values
by species and timber value area. The taxpayer must make the adjustments for the
logging system and for small total volume on the harvest operation and county
location if the operation qualifies.
TABLE 6, SALVAGE YOUNG GROWTH HARVEST VALUES - This table shows the harvest
values for such timber removed by salvage logging only. The table shows the
harvest values by species and timber value area. The taxpayer must make the
adjustments for the logging system and for small total volume on the harvest
operation and county location if the operation qualifies.
5
CALIFORNIA STATE BOARD OF EQUALIZATION
HARVEST VALUE SCHEDULES, EFFECTIVE JULY 1 THROUGH DECEMBER 31, 1997
NOT FINAL VALUES
-------------------------------------------------------------------------------
TABLE 3 - OLD GROWTH TIMBER HARVEST VALUES
Tract or Logging [Logging Code 1]
------------------------------------------------------------------------------------------------------------
SPECIES SIZE TIMBER VALUE AREA
---------------------------------------------------------------------
SPECIES CODE CODE 1 2N 2S 3 4 5 6 7 8 9N 9S
============================================================================================================
Ponderosa Pine PPD 1 * * * 660 680 660 700 650 675 650 *
----------------------------------------------------------------------------------------
2 600 500 450 550 600 680 620 550 675 650 275
----------------------------------------------------------------------------------------
3 * * * 450 600 470 550 450 450 475 *
------------------------------------------------------------------------------------------------------------
Sugar Pine SPO 1 * * * 650 680 660 700 650 675 650 *
------------------------------------------------------------------------------
2 600 600 450 650 600 580 620 550 675 650 275
------------------------------------------------------------------------------
3 * * * 450 600 470 550 450 450 475 *
------------------------------------------------------------------------------------------------------------
Fir and ???/??? FO 225 190 130 300 300 350 420 350 360 340 70
------------------------------------------------------------------------------------------------------------
Xxxxxxx-Fir DFO 1 700 * * 600 630 830 650 800 625 * *
------------------------------------------------------------------------------
2 575 400 380 600 630 640 560 500 485 340 70
------------------------------------------------------------------------------
3 400 * * 400 400 460 470 400 400 * *
------------------------------------------------------------------------------------------------------------
Incense- cedar ICO 300 270 300 300 310 380 350 350 315 65
------------------------------------------------------------------------------------------------------------
Conifers, misc CMO 100 125 125 200 200 190 200 210 180 200 40
------------------------------------------------------------------------------------------------------------
Xxxxxxx XX 0 850 * *
------------------------------------------------------------------------------
2 725 710 650
------------------------------------------------------------------------------
3 600 * *
------------------------------------------------------------------------------------------------------------
Port-Oxford-cedar PCD 3600 3000 3000
------------------------------------------------------------------------------------------------------------
Whitewoods WWD 190 180 130
------------------------------------------------------------------------------------------------------------
* This species is not rated for size in this Timber Value Area - do not enter a Size Code.
------------------------------------------------------------------------------------------------------------
ADJUSTMENTS
-----------
Logging System:
Deduct $10 for volumes which were high feed logged [Logging Code 2]
Deduct $30 for volumes which were short-span skyline logged [Logging Code
3]
Deduct $50 for volumes which were long-span skyline logged [Logging Code 4]
Deduct $140 for volumes which were helicopter logged [Logging Code 5]
County:
Deduct $50 if harvesting was located in any of the following counties:
Xxxxx, Xxxxxxxx, San Mateo, Santa Xxxxx, or Santa ???
Small Total Volume:
Deduct $50 if total volume harvested this quarter is less than 300 MBF
Deduct $100 if total volume harvested this quarter is less than 100 MBF
Deduct $150 if total volume harvested this quarter is less than 25 MBF
Small Volume per Acre:
Deduct $25 if the average volume harvested this quarter is under 5 MBF per
acre
$1 PER MBF IS THE MINIMUM HARVEST VALUE ALLOWABLE AFTER ADJUSTMENT
(SEE REVERSE SIDE FOR YOUNG GROWTH TIMBER HARVEST VALUES)
--------------------------------------------------------------------------------
HARVEST VALUE SCHEDULES, EFFECTIVE JULY 1 THROUGH DECEMBER 31, 1997
NOT FINAL VALUES
------------------------------------------------------------------------------------------------------------------------------------
TABLE 4 - YOUNG GROWTH TIMBER HARVEST VALUES
Tractor Logging (Logging Code 1)
------------------------------------------------------------------------------------------------------------------------------------
SPECIES TIMBER VALUE AREA
---------------------------------------------------------------------------------------
SPECIES CODE 1 2N 2S 3 4 5 6 7 8 9N 9S
====================================================================================================================================
Ponderosa Pine PPY 310 260 240 330 360 350 400 410 400 390 180
------------------------------------------------------------------------------------------------------------------------------------
Sugar Pine SPY 310 260 240 330 360 350 400 410 400 390 180
------------------------------------------------------------------------------------------------------------------------------------
Fir and Ha???? FY 325 180 130 260 260 250 390 280 290 260 60
------------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx-??? DFY 350 310 280 370 380 340 460 380 360 280 60
------------------------------------------------------------------------------------------------------------------------------------
Incense-cedar ICY 300 270 280 280 260 340 290 290 220 60
------------------------------------------------------------------------------------------------------------------------------------
Conifers, misc CMY 100 125 126 190 200 190 200 210 160 180 40
------------------------------------------------------------------------------------------------------------------------------------
Redwood RY 525 630 510 440
------------------------------------------------------------------------------------------------------------------------------------
Port-O???-cedar PCY 300 260 250
------------------------------------------------------------------------------------------------------------------------------------
Whitewoods WWY 190 180 130
------------------------------------------------------------------------------------------------------------------------------------
ADJUSTMENTS
-----------
Logging System:
Deduct $10 for volumes which were high-lead logged (Logging Code 2)
Deduct $30 for volumes which were short-open skyline logged (Logging Code
3)
Deduct $60 for volumes which were long-apart skyline logged (Logging Code
4)
Deduct $140 for volumes which were helicopter logged (Logging Code 5)
County:
Deduct $60 if harvesting was located in any of the following counties:
Marin, Monterey, San Maloo, Santa Xxxxx, or Santa Crux
Small Total Volume:
Deduct $50 if total volume harvested this quarter is less than 900 MBF
Deduct $100 if total volume harvested this quarter is less than 100 MBF
Deduct $160 if total volume harvested this quarter is less than 26 MBF
Small Volume per Acre:
Deduct $25 if the average volume harvested this quarter is under 5 MBF per
acre
$1 PER MBF IS THE MINIMUM HARVEST VALUE ALLOWABLE AFTER ADJUSTMENT
(SEE REVERSE SIDE FOR OLD GROWTH TIMBER HARVEST VALUES)
--------------------------------------------------------------------------------
QUARTERLY TIMBER REPORT (SECTION 7.2(F))
FOR QUARTER ENDING 9/30/97
ASSET VALUE/FUNDED DEBT
VALUATION USING CALIFORNIA STATE BOARD OF EQUALIZATION TVA-5
PRICES EFFECTIVE 7/1/97 TO 12/31/97
DATE OF VALUATION; 9/30/97
===========================================================================
VALUE LOG/HAUL NET VALUE
KLAMATH MBF F/MBF F/MBF $/MBF ($/MM)
---------------------------------------------------------------------------
POND PINE 738,863 400 140 240 192.38
XXXX FIR. 268,288 450 140 320 83.64
OTHER 978,255 380 140 250 244.07
TOTAL 1,974,387 403 679.07
OCHOCO
----------
POND less than 16" 78,850 400 112 288 22.18
POND greater than
or equal to 16" 133,140 700 212 548 78.29
DF 43,747 460 212 348 86.43
OTHER 17,037 390 712 278 1.74
TOTAL 270,489 557 120.41
TOTAL ALL 2,245,276 421 839.49
WHOLESALE @ 70% 447.84
===========================================================================
QUARTERLY TIMBER REPORT (SECTION 7.2(F))
FOR QUARTER ENDING 9/30/97
==============================================================================================================
1/1/97 97.1 97.1 97.1 97.1 97.1 97.1 3/31/97
KLAMATH BEG INV HARVEST STUMPAGE STUMPAGE LAND SALES GROWTH ACQUISITION CLOSING
-------------
MBF MBF SOLD REMOVED MBF MBF MBF MBF
-----------------------------------------------------------------------------------------------
PONDEROSA 732,700 4,667 0 0 0 9,098 0 731,911
XXXXXXX FIR 265,900 4,974 0 0 0 3,774 0 165,200
LODGEPOLE 452,400 5,216 11,045 0 0 5,577 0 451,780
WHITE FIR 424,100 8,100 0 0 0 5,125 0 423,216
OTHER 102,900 1,083 0 0 0 1,273 0 103,060
TOTAL 1,078,100 22,249 11,045 0 0 24,447 0 1,950,195
==============================================================================================================
==============================================================================================================
4/1/97 97.2 97.2 97.2 97.2 97.2 97.2 6/30/97
HLAMATH BEG INV HARVEST STUMPAGE STUMPAGE LAND SALES GROWTH ACQUISITION CLOSING
-------------
MBF MBF SOLD REMOVED MBF MBF MBF MBF
-----------------------------------------------------------------------------------------------
PONDEROSA 738,911 5,270 1,595 559 0 9,139 0 740,248
XXXXXXX FIR 265,290 8,342 4,493 542 0 3,700 0 259,710
LODGEPOLE 461,780 1,073 0 0 0 5,634 0 455,320
WHITE FIR 427,250 8,088 1,898 105 0 4,170 0 418,500
OTHER 10?,050 1,000 256 58 0 1,276 0 103,068
TOTAL 1,980,156 33,782 9,443 3,103 0 24,427 0 1,578,610
==============================================================================================================
==============================================================================================================
7/1/97 97.3 97.3 97.3 97.3 97.3 97.3 9/30/97
HLAMATH BEG INV HARVEST STUMPAGE STUMPAGE LAND SALES GROWTH ACQUISITION CLOSING
-------------
MBF MBF SOLD REMOVED MBF MBF MBF MBF
-----------------------------------------------------------------------------------------------
PONDEROSA 740,248 8,705 0 613 0 9,134 0 738,653
XXXXXXX FIR 259,216 3,921 0 214 0 3,166 0 250,285
LODGEPOLE 456,310 4,447 0 0 0 5,648 0 457,572
WHITE FIR 410,500 8,547 0 443 0 5,120 0 415,328
OTHER 103,256 1,117 0 21 0 1,277 0 103,405
TOTAL 1,978,650 27,038 0 1,501 0 24,375 0 1,574,388
OCHOCO
-------------
PPINE less than 16" 0 0 0 0 0 950 75,000 76,900
PPINE greater than
or equals to 16" 0 0 0 17,847 0 1,644 138,100 133,140
XXXXXXX FIR 0 0 0 1,698 0 540 44,300 43,741
OTHER 0 0 0 1,404 0 211 17,510 17,057
TOTAL 0 0 0 12,547 0 3,144 276,100 170,869
TOTAL ALL 1,978,650 27,038 17,036 17,847 0 27,719 276,100 2,245,771
==============================================================================================================
QUARTERLY TIMBER REPORT (SECTION 7.2(F)
FOR QUARTERLY ENDING 9/30/97
1997 STUMPAGE SALES
MBF
========================================================================================================================
KOLAMATH FOX LAKE PINEHURST LONG PH XXX CK CHEMULT TOTAL
LPP 0 0 0 0 11,045 11,045
DF 1,646 1,112 1,123 912 4,693
PP/SP 351 575 1,344 726 2,696
WF 329 479 1,032 58 1,898
INC 90 17 42 101 256
TOTAL 2,383 2,282 3,541 1,197 11,045 20,488
OCHOCO OCHOC 1 OCHOC 2 TOTAL
------------------------------------------------------------------------------------------------------------------------
PP less than 16 0 0 0
PP greater than or equal 16 16,384 2,280 18,644
DF 2,442 660 3,102
OTHER 2,217 0 2,127
TOTAL 21,033 2,940 23,973
========================================================================================================================
UMBF
=============================================================================================================
PURCHASER SALE DF PP/SP LPP WF OTHER AVG
-------------------------------------------------------------------------------------------------------------
CROWN CHEMULT 0 0 385 0 0 385
USF1 FOXLK 444 336 0 349 465 416
BOISE PINEHURST 606 485 0 335 315 000
XXXXXXX XXX XXXX XX 000 361 0 315 410 155
USF1 XXX CK 410 200 0 337 390 390
CROWN OCHOCO 1 370 827 0 340 0 868
OCHOCO LBR OCHOCO 2 370 646 0 340 0 584
=============================================================================================================
QUARTERLY TIMBER REPORT (SECTION 7.2(F)
FOR QUARTER ENDING 9/30/97
97.3 CUSTOMER SUMMARY
-------------------------------------------------------
SALES COSTS NET
CUSTOMER MBF HMBF HMBF HMBF
-------------------------------------------------------
XXXXXXX PROD 7,882 477 749 278
OCHOCO CROWN 6,367 515 0 610
BOISE CASCADE 4,525 473 137 356
BUARILL 3,318 427 189 276
USF1 2,431 513 133 380
OCHOCO OCHOCO 2,188 583 0 583
XXXXXXX XX 1,119 199 144 47
XXXX & XXXXXX ????? 414 346 260
LONG PRAIRIE 1,601 350 0 000
XXXXXXX XXXXX 1,181 441 153 280
1P 1,138 45 26 21
CROWN PACIFIC 1,180 660 191 477
XXXXXX 1,084 518 145 365
WEYCO 484 60 0 60
P&M CEDAR 272 686 205 480
TIMER PROD 83 480 181 319
FREMONT 55 437 145 182
BIG VALLEY 47 400 155 245
17,023 462 140 ???
-------------------------------------------------------
EXHIBIT H
ESCROW AGREEMENT
This ESCROW AGREEMENT ("Agreement") dated as of ______________, ____
---------
is entered into by and between U.S. TIMBERLANDS KLAMATH FALLS, L.L.C., a
Delaware limited liability company (the "Company"), and
-------
_________________________ (the "Escrow Agent").
------------
RECITALS
--------
A. The Company has entered into (i) the Credit Agreement dated as of
November 19, 1997 (as the same may be extended, renewed, amended or restated
from time to time, the "Credit Agreement"), with the several financial
----------------
institutions from time to time party thereto (the "Banks") and Bank of America
-----
National Trust and Savings Association, as Issuing Bank, as Swingline Bank and
as agent for the Banks (in such last capacity, the "Agent"), and (ii) the
-----
Indenture dated as of November 19, 1997 among the Company, U.S. Timberlands
Finance Corp., and State Street Bank & Trust Company, as trustee (together with
its successors and assigns, the "Trustee") (the "Indenture"), entered into for
------- ---------
the benefit of the holders from time to time of the notes issued pursuant
thereto (the "Senior Noteholders"). The Escrow Agent acknowledges receipt of
------------------
copies of each of the Credit Agreement and the Indenture provided to it by the
Company. Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the Credit Agreement.
B. Subsection 8.2(b) of the Credit Agreement and Section 4.16 of the
Indenture permit the Company and its Subsidiaries to sell assets or, in the case
of subsection 8.2(b) of the Credit Agreement, suffer Events of Loss under the
circumstances described therein so long as certain proceeds thereof are applied
to the purchase of productive assets in a permitted business or to purchase,
repay or cash collateralize Senior Debt. Any Excess Asset Sales Proceeds that
have not been applied to purchase productive assets in a permitted business or
distributed to the holders of Senior Debt for the purchase, repayment or cash
collateralization of such Senior Debt are required by the Credit Agreement to be
placed immediately upon receipt thereof in an escrow or other similar account
for application in accordance with such subsection 8.2(b).
C. Section 8.20 of the Credit Agreement and Section 4.17 of the
Indenture permit the Company and its Subsidiaries to permit Timber Harvest in
excess of the limitations provided for in such Section so long as certain
proceeds thereof are applied to purchase productive assets in a permitted
business or to purchase, repay or cash collateralize Senior Debt. Any Excess
Timber Harvest Proceeds that have not been applied to purchase productive assets
in a permitted business or distributed to the holders of Senior Debt for the
purchase, repayment or cash collateralization of such Senior Debt are required
by the Credit Agreement to be placed
1
immediately upon receipt thereof in an escrow or other similar account for
application in accordance with such Section 8.20.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the Company and the Escrow Agent hereby agree as
follows:
1. Escrow Account.
--------------
(a) Establishment of Escrow Account and Delivery of Funds. The
-----------------------------------------------------
Escrow Agent has established a special and irrevocable escrow account designated
the "U.S. Timberlands Escrow Account" (together with all subaccounts thereunder
and any successor account(s) that may be established from time to time with the
Escrow Agent in replacement thereof, the "Escrow Account"). The Escrow Agent
--------------
shall keep the funds held in the Escrow Account separate and apart from all
other funds and money held by it and shall hold the Escrow Account for the
account and benefit of the persons as hereinafter set forth. The Company may
make deposits from time to time to the Escrow Account in the amount of (i) asset
sales proceeds that the Company intends to apply in the manner contemplated by
subsection 8.2(b) of the Credit Agreement and Section 4.16 of the Indenture and
(ii) timber harvest proceeds that the Company intends to apply in the manner
contemplated by Section 8.20 of the Credit Agreement and Section 4.17 of the
Indenture. Once deposited, such funds shall be maintained and applied by the
Escrow Agent in accordance herewith. The Company agrees that upon the deposit
of funds into the Escrow Account by or at the direction of the Company, such
deposit shall become (except as expressly provided in Section 1(b) hereof)
irrevocable and the Company shall have no right to withdraw amounts contained
therein or interest or other income accrued thereon except as provided in
Section 1(b) hereof. By the acceptance of the benefits of this Agreement, each
of the Agent, the Banks, the Trustee, and the Senior Noteholders agree that the
deposit of funds into the Escrow Account shall not create a Lien for purposes of
the Credit Agreement or the Indenture. The Escrow Agent shall separately
account for each deposit made to the Escrow Account. Each deposit to the Escrow
Account shall be maintained by the Escrow Agent as a subaccount thereunder,
numbered sequentially in chronological order.
(b) Application of Funds.
--------------------
(i) Subject to prior distribution in accordance with clause
(iii) below, the Escrow Agent shall release funds held in the Escrow Account,
including the interest and other income accrued thereon, to or at the direction
of Company if and only if the Company shall have delivered to the Escrow Agent,
and the Escrow Agent has in turn provided a copy thereof to the Agent and the
Trustee no later than five Business Days prior to the proposed date of such
release, a certificate of a Responsible Officer substantially in the form of
Exhibit A hereto. The Escrow Agent agrees to provide such notice to the Trustee
---------
and the Agent by facsimile promptly after receipt thereof from the Company, but
in any event on or before the next business day after receipt by the Escrow
Agent. In releasing funds from the Escrow Account, the Escrow Agent shall
release deposits held in the Escrow Account pursuant to this clause (i) from the
subaccounts thereunder in the order in which such subaccounts were established.
For example,
2
if the Company has delivered a certificate sufficient under this clause to
authorize the Escrow Agent to release $100 from the Escrow Account, and if the
Escrow Agent holds three subaccounts under the Escrow Account, number 1
(established on January 1 with $20), number 2 (established on February 1 with
$60), and number 3 (established on March 1 with $50), the Escrow Agent shall
satisfy such release of funds by first emptying subaccount number 1, second
emptying subaccount number 2, and third releasing an amount from subaccount
number 3 sufficient to bring the total release of funds (after giving effect to
interest released from subaccounts 1 and 2) to $100.
(ii) Subject to prior distribution by the Escrow Agent in
accordance with clause (i) above, the Escrow Agent shall hold the funds in each
subaccount under the Escrow Account and disburse such funds in accordance with
clause (iii) below upon the date identified to the Escrow Agent in writing by a
Responsible Officer as the "Disbursement Date" for such deposit, which date
shall be not later than the 300th day after the date of the deposit of such
funds with the Escrow Agent.
(iii) Subject to clause (iv) below, if on the Disbursement Date
with respect to any subaccount under the Escrow Account, any funds remain in
such subaccount, the Escrow Agent shall promptly distribute such funds to the
Agent or the Trustee, or to both, in the amounts and as directed by the Company
in writing to the Escrow Agent. The Escrow Agent shall be entitled to rely
conclusively upon the certificates referred to in this Section.
(iv) The Company shall have the right, when directing
disbursements of funds from the Escrow Account pursuant to clause (i) or (iii)
above, to direct that any amounts representing interest or other income on
amounts deposited arising from investment thereof, as contemplated by Section
2, be paid to the Company, or as it may otherwise direct.
2. Investments.
-----------
(a) The Escrow Agent shall have no obligation to make any
investment or reinvestment of any moneys held in the Escrow Account at any time
except as expressly provided in this Agreement.
(b) Any amounts held by the Escrow Agent shall be invested by
the Escrow Agent from time to time in Cash Equivalents as directed in writing by
the Company, and the Escrow Agent agrees to comply with the Company's written
request to invest in any Cash Equivalents (collectively, "Permitted
---------
Investments"); provided that all such investments shall mature in 180 days or
----------- --------
less after the date of investment. The Escrow Agent may sell any Permitted
Investment (without regard to maturity date) whenever necessary to make any
transfer required by Section 1.
(c) The Escrow Agent shall hold, invest and apply any income
realized as a result of any investment pursuant to this Section 2 as part of the
Escrow Account and within the same subaccount to which such interest is
attributable.
3
(d) With respect to the investment of funds on deposit in the
Escrow Account pursuant to this Section 2 and to the extent the Company is
permitted to direct such investment hereunder, the Escrow Agent shall be
entitled to rely upon the written instructions of [that] [those] individual[s]
whose signatures appear in the spaces provided below, or such other
individual[s] as may hereafter be designated in writing by the Company:
________________________
[name]
[______________________]
[name]
3. Terms and Conditions; Representation of Escrow Agent. To the
----------------------------------------------------
extent not inconsistent with this Agreement, the Company agrees to be bound by
the Escrow Agent's Standard Terms and Conditions attached hereto as Exhibit D
---------
(as the same may from time to time be amended, modified or supplemented, the
"Standard Terms and Conditions") and they are hereby incorporated by reference
-----------------------------
into and form a part of this Agreement with the same effect as if they were set
forth in full herein. The Escrow Agent represents to the Company that it is not
an Affiliate of the Trustee, the Agent, or any Bank as identified to it in
writing by the Company.
4. Compensation. The Escrow Agent shall be entitled to compensation
------------
from the Company for the maintenance of, and investment of funds contained in,
the Escrow Account in accordance with Schedule 2 attached hereto. Such
compensation shall be payable as provided in Schedule 2. The fees of and the
costs incurred by the Escrow Agent shall not be a charge on and in no event
shall be deducted from the Escrow Account but shall be an additional obligation
of the Company which shall survive the termination of this Agreement.
5. Reports. The Escrow Agent shall submit to the Agent and Trustee
-------
a description of each deposit into the Escrow Account promptly after such
deposit occurs. In addition, upon request by the Company, the Agent, or the
Trustee, the Escrow Agent shall provide to the Company, the Agent, and the
Trustee a report covering all funds it shall have received and all payments it
shall have made or caused to be made hereunder during the period specified in
such request. Each report shall also list each deposit into the Escrow Account
and the investment income related thereto, all Permitted Investments and the
amount of money accounted for in each subaccount of the Escrow Account on the
date preceding the date of such report.
6. Notices, Etc. Any notice or other communication herein required
------------
or permitted to be given shall be in writing and may be delivered in person,
with receipt acknowledged, or sent by telex, telecopy or by United States mail,
registered or certified, return receipt requested, postage prepaid and addressed
as set forth on the signature pages to this Agreement in the case of the parties
hereto, and as set forth on Schedule I in the case of the
----------
4
Agent and the Trustee, or at such other address as may be substituted by notice
given as herein provided. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice. All such notices
and communications shall be effective upon receipt. Failure or delay in
delivering copies of any notice, demand, request, consent, approval, declaration
or other communication to the persons designated above to receive copies shall
in no way adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.
7. Termination. The Company may terminate this Agreement at any
-----------
time that the balance in each Escrow Account is zero upon three Business Days
prior written notice to the Escrow Agent with a copy to the Agent.
8. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the Company and the Escrow Agent and their respective
successors and assigns, except that the Company shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Escrow Agent, the Agent and the Trustee.
9. Governing Law. This Agreement shall be governed by, and
-------------
construed and enforced in accordance with, the laws of the State of New York and
any applicable laws of the United States of America.
10. Entire Agreement. This Agreement constitutes and contains the
----------------
entire agreement among the parties with respect to the subject matter hereof and
supersedes any and all prior agreements, negotiations, correspondence,
understandings and communications among the parties with respect to the subject
matter hereof, whether written or oral, respecting the subject matter hereof.
11. Interpretation. Any reference to a "Section" shall refer to the
--------------
relevant Section to this Agreement, unless specifically indicated to the
contrary and the words "herein," "hereof" and "hereunder" and other words of
similar import shall refer to this Agreement as a whole, as the same may from
time to time be amended, amended and restated, modified or supplemented, and not
to any particular section, subsection or clause contained in this Agreement.
12. Amendments; Waivers. No amendment, modification, discharge or
-------------------
waiver of, or consent to any departure by the Company from, any provision of
this Agreement shall be effective unless the same shall be in writing and signed
by the Escrow Agent, the Trustee, and the Agent and then such waiver shall be
effective only in the specific instance and for the specific purpose for which
given.
13. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such a manner as to be valid, legal and
enforceable under the applicable law of any jurisdiction. Without limiting the
generality of the foregoing sentence, in case any provision of this Agreement
shall be invalid, illegal or unenforceable under the applicable law of any
5
jurisdiction, the validity, legality and enforceability of the remaining
provisions, or of such provision in any other jurisdiction, shall not in any way
be affected or impaired thereby.
14. Headings. Section headings in this Agreement are included herein
--------
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
15. No Third Parties Benefited. This Agreement is made and entered
--------------------------
into for the sole protection and legal benefit of the Company, the Escrow Agent,
the Agent, the Trustee, the Senior Noteholders and the Banks, and each of their
permitted successors and assigns, and no other person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with this Agreement. Except as set forth herein, the Escrow
Agent shall have no obligation to any person not a party to this Agreement.
16. Counterparts. This Agreement and any amendments, waivers,
------------
consents or supplements hereto may be executed in any number of counterparts,
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
U.S. TIMBERLANDS KLAMATH FALLS, L.L.C.,
By: U.S. Timberlands Services Company, L.L.C.,
its Managing Member
By:___________________________________________
Title:________________________________________
Notice to be sent to:
___________________________________________________
as Escrow Agent
By:________________________________________________
Title:_____________________________________________
Notice to be sent to:
Attention: ________________________________________
Facsimile:____________________________________
Telephone:____________________________________
7
Schedule 1 to
Escrow Agreement
AGENT ADDRESS FOR NOTICES
-------------------------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
------------------------------------------------------
as Agent
Bank of America National Trust
and Savings Association
Paper & Forest Products #9973
000 Xxxxxxxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: X. X. Xxxxx, Managing Director
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
--------------
Bank of America National Trust and Savings Association
Agency Administration Services #5596
0000 Xxxxxxx Xxxx.
Xxxxxxx, XX 00000- 281
Attention: Xxxxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
TRUSTEE ADDRESS FOR NOTICES
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8
Exhibit A to Escrow Agreement
OFFICER'S CERTIFICATE
________["Escrow Agent"]_________
_________________________________
_________________________________
_________________________________
Re: Escrow Agreement between you and U.S. Timberlands Klamath Falls;
L.L.C. dated as of ______, ___ (the "Escrow Agreement")
Ladies & Gentlemen:
Reference is made to the Escrow Agreement, capitalized terms not otherwise
defined herein shall have the meanings given in the Escrow Agreement. [The
Company hereby requests pursuant to clause (i) of subsection 1(b) of the Escrow
Agreement that the Escrow Agent disburse, to the Person(s) identified on
Schedule 1 attached hereto, in accordance with the wire transfer information set
forth on that Schedule, the amounts set forth opposite such Person's name on
that Schedule.] or [The Company hereby requests pursuant to clause (iii) of
subsection 1(b) of the Escrow Agreement that the Escrow Agent disburse, to the
Agent and/or the Trustee only, in accordance with the wire transfer information
set forth on that Schedule, the amounts set forth opposite the such Person's
name on that Schedule.]
The undersigned hereby certifies for the benefit of the Escrow Agent, the
Agent, the Banks, and the Senior Noteholders that (1) [he/she] is a Responsible
Officer of the Company and (2) the application of the funds the disbursement of
which is requested hereby complies in all respects with the Escrow Agreement,
subsection 8.2(b) and Section 8.20 of the Credit Agreement, as applicable, and
Sections 4.16 and 4.17 of the Indenture, as applicable.
Executed this _____ day of ____, _____
______________________
[Title] of
U.S. Timberlands Services Company, L.L.C.,
as Managing Member of
U.S. Timberlands Klamath Falls, L.L.C.
